SoftBank offers to acquire Uber shares at 30% discount, devaluing company by $20B

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A group of investors led by Japan's SoftBank has reportedly made an offer to buy shares of ride-hailing service Uber, but the tender offer values the firm at a 30 percent discount, with the proposed price per share effectively knocking $20 billion off the value of the company.




SoftBank Group's offer is based upon a valuation of Uber Technologies at $48 billion, down from its most recent valuation of $68.5 billion, sources of Reuters claimed on Monday. The investment, apparently approved by Uber's board members in November, effectively puts the value at below the $51 billion the firm was supposedly worth in 2015.

It is believed the SoftBank consortium, which includes the Dragoneer Investment Group, plans to take a stake of at least 14 percent in Uber through the deal, with investors given a month to provide their response to the offer. If too few share owners respond positively to the proposal, SoftBank has the option to walk away, though it is also expected to make a separate investment of $1 billion.

If successful, the deal would also put into motion a number of other changes that would affect the company, including governance changes that would limit the voting power of some early shareholders, as well as reduce the influence of former Chief Executive Travis Kalanick. The board would also be expanded from 11 members to 17, with the SoftBank investor group acquiring two of the new seats.

Investors apparently expected the discounted offer price, which seemingly rectifies the valuation of the firm following after a year of scandals and criticism. Arguably the biggest issue of the year was the resignation of Kalanick as Chief Executive, prompted by pressure from major investment firms wanting changes to the company's management in the wake of numerous issues. .

Under new CEO Dara Khosrowshahi, Uber has attempted to change its corporate culture and its public perception. One early move was a vow by the firm to stop the extending tracking function of its iPhone app, a feature that let the company continue tracking rider movements for up to five minutes after a trip.

In the last year, Uber has also come under fire for its alleged theft of intellectual property from Waymo, creating a "Hell" app for tracking drivers from main rival Lyft, breaking App Store rules by identifying user devices by hardware ID, and losing its license to operate in London over public safety and security concerns.

Last week, it was revealed Uber had been the victim of a major hack of its systems, with the data from 50 million customers and around 7 million drivers acquired in the breach. While Uber could have informed authorities of the breach, which took place in October 2016, the company instead chose to pay the hackers $100,000 to delete the data.

The SoftBank offer's discount is unusual as, though nearly all share purchases by new investors from existing shareholders are discounted based on the company's valuation, the discount in this instance is fairly substantial. This is especially notable considering reports that Uber plans to hold an IPO in 2019.

Paul Haslett, co-founder and head of investments at EquityZen, told the report such valuation cuts happen if the company is at risk of being sold at a heavy discount, though apparently this isn't the case for Uber. "It really comes down to a re-pricing of Uber's value," suggests Haslett.

Comments

  • Reply 1 of 9
    jd_in_sbjd_in_sb Posts: 1,479member
    A $48 billion valuation is pretty good for a company with zero profit and bleeding hundreds of millions of dollars per quarter. 
    baconstangLukeCagemelodyof1974stevenozSpamSandwich
  • Reply 2 of 9
    maestro64maestro64 Posts: 4,146member
    jd_in_sb said:
    A $48 billion valuation is pretty good for a company with zero profit and bleeding hundreds of millions of dollars per quarter. 


    and has competition come on strong.

    UBER is the example of what is wrong with this country, people claim to have a values which they claim are non-negotiable, and when their favor person or company crosses the non-negotiable line they look the other way. This company has done so many wrong and unethical things and all the holier than thou customers ignore it since not using UBER would impacted them personally.

    baconstang
  • Reply 3 of 9
    wigbywigby Posts: 671member
    maestro64 said:
    jd_in_sb said:
    A $48 billion valuation is pretty good for a company with zero profit and bleeding hundreds of millions of dollars per quarter. 


    and has competition come on strong.

    UBER is the example of what is wrong with this country, people claim to have a values which they claim are non-negotiable, and when their favor person or company crosses the non-negotiable line they look the other way. This company has done so many wrong and unethical things and all the holier than thou customers ignore it since not using UBER would impacted them personally.

    There are plenty of people that stopped using Uber permanently or temporarily but there are just more that believe getting from point A to B is the only thing that matters. The attitude is an unapologetic, direct correlation to the Trump presidency.
  • Reply 4 of 9
    calicali Posts: 3,495member
    maestro64 said:
    jd_in_sb said:
    A $48 billion valuation is pretty good for a company with zero profit and bleeding hundreds of millions of dollars per quarter. 


    and has competition come on strong.

    UBER is the example of what is wrong with this country, people claim to have a values which they claim are non-negotiable, and when their favor person or company crosses the non-negotiable line they look the other way. This company has done so many wrong and unethical things and all the holier than thou customers ignore it since not using UBER would impacted them personally.

    Like android users who “don’t care” about invasion of privacy and will bash an American company who is the highest tax payer and praise a foreign knockoff manufacturer. 
    anton zuykov
  • Reply 5 of 9
    gatorguygatorguy Posts: 18,717member
    cali said:
    maestro64 said:
    jd_in_sb said:
    A $48 billion valuation is pretty good for a company with zero profit and bleeding hundreds of millions of dollars per quarter. 


    and has competition come on strong.

    UBER is the example of what is wrong with this country, people claim to have a values which they claim are non-negotiable, and when their favor person or company crosses the non-negotiable line they look the other way. This company has done so many wrong and unethical things and all the holier than thou customers ignore it since not using UBER would impacted them personally.

    Like android users who “don’t care” about invasion of privacy and will bash an American company who is the highest tax payer and praise a foreign knockoff manufacturer. 
    ...an odd totally off-topic comment that invites more of the same. Of course attempting to validate "our pathetically insipid existence with some intense online altercation with perfect strangers with an air of smug self-righteous condescension" is a nice way to pass an afternoon in the forums. /s

    ;)
    edited November 2017
  • Reply 6 of 9
    wigby said:
    maestro64 said:
    jd_in_sb said:
    A $48 billion valuation is pretty good for a company with zero profit and bleeding hundreds of millions of dollars per quarter. 


    and has competition come on strong.

    UBER is the example of what is wrong with this country, people claim to have a values which they claim are non-negotiable, and when their favor person or company crosses the non-negotiable line they look the other way. This company has done so many wrong and unethical things and all the holier than thou customers ignore it since not using UBER would impacted them personally.

    There are plenty of people that stopped using Uber permanently or temporarily but there are just more that believe getting from point A to B is the only thing that matters. The attitude is an unapologetic, direct correlation to the Trump presidency.
    That is called - focusing on what is real instead of being focuses on ephemeral and unattainable targets. That is why this type achieves success much more often than sjw-type millennials concentrating on "everything good for everyone" and failing at everything, except whining.
    This realistic attitude is totally unapologetic, indeed. How dare they not be warriors when the time itself calls for it, right?
    SMH!
    A thought of people having different opinions did not occur to you, obviously.
    edited November 2017 radarthekat
  • Reply 7 of 9
    jd_in_sb said:
    A $48 billion valuation is pretty good for a company with zero profit and bleeding hundreds of millions of dollars per quarter. 
    "I'd buy that for a dollar!"
  • Reply 8 of 9

    maestro64 said:
    jd_in_sb said:
    A $48 billion valuation is pretty good for a company with zero profit and bleeding hundreds of millions of dollars per quarter. 


    and has competition come on strong.

    UBER is the example of what is wrong with this country, people claim to have a values which they claim are non-negotiable, and when their favor person or company crosses the non-negotiable line they look the other way. This company has done so many wrong and unethical things and all the holier than thou customers ignore it since not using UBER would impacted them personally.

    Uber's value is determined by investors and consumers. Apparently there are enough of both right now that SoftBank is convinced to invest.

    Also, isn't it interesting that SoftBank is making this play for Uber AND they recently bought Boston Dynamics, one of the premier bipedal and quadrupedal robotics companies in business today?
  • Reply 9 of 9
    cowycowy Posts: 17member
    Stop using uber for sometime, they're getting more and more expensive.
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