Fundings and Exits

SoftBank makes offer for Uber shares at 30% discount



A SoftBank Group-led team of investors has made an offer to buy Uber’s shares in a tender offer that would value the company at about a 30% discount to Uber’s last private valuation of nearly $70 billion, a source with knowledge of the proposed deal tells TechCrunch. We’re hearing that the proposed price per share is $32.96, which works out to under $50 billion.

Bloomberg first reported the latest development, which follows months of talks about both a direct investment in the ride-hailing company and also a large purchase of the shares of existing shareholders.

If Uber signs off on the offer, it will be the approval that’s needed to move forward with what is expected to be the largest secondary transaction in history. Uber already announced a few weeks ago that it’s moving forward with the process, specifically that it “entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment.”

The deal would include both a $1 billion investment directly in Uber of the last private valuation. The tender offer would additionally be up to $9 billion of shares from existing shareholders. We reported earlier this month that the SoftBank-led group would like to own at least 14% of the company.It’s a package deal and the company will only receive the investment if the secondary transaction also gets done.

We’re told that thousands of current employees will be eligible to sell shares. Other Uber shareholders, including venture capitalists, angel investors and former employees could also be eligible.

This will finally give more employees an opportunity to turn paper money into cash. Until recently, most Uber shareholders were prevented from selling. The $1 billion investment in the company will also help the company continue to fuel its growth as it prepares to grow public in 2019.

This is a big moment for Uber, in what has been a very difficult year. Uber has been dealt legal battles, including a patent lawsuit with Alphabet’s self-driving car division, and public outcry about its company culture. Co-founder and CEO Travis Kalanick was pressured to resign in June.

If the deal is completed, investor and board member Benchmark Capital has agreed to drop its lawsuit against Kalanick. The lawsuit related to Kalanick’s power to appoint three board seats, including his own.

Kalanick recently named Ursula Burns and John Thain to those seats. If one of them gives up their spot, Kalanick will require a board vote to appoint a replacement, as long as the SoftBank deal is finalized.

 

 

Featured Image: Visual China Group



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