SoftBank Tender for 14% Stake in Uber Closes at a Deep Discount

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【Summary】Japanese multinational corporation SoftBank has acquired a 14% stake in Uber, as early shareholders have agreed to sell a large stake in the company. The deal was first reported by the Wall Street Journal.

  Eric Walz  ·  Dec 28, 2017 2:40 PM PT
author: Eric Walz   

SAN FRANCISCO —  Japanese multinational corporation SoftBank has acquired a 14% stake in Uber, as early shareholders have agreed to sell a large stake in the company. The deal was first reported by the Wall Street Journal.

The purchase was made at a deep discount —around 30% for the company's most recent valuation of $48 billion. The deal heavily discounts Uber's value, which last year was estimated at nearly $70 billion. More importantly, the deal changes the way Uber's board oversees the company, which is dealing with sexual harassment allegations, federal criminal investigations, in-fighting, and other issues.

Rajeev Misra, CEO of SoftBank Investment Advisers, said in a statement "We are appreciative of the support from Uber's shareholders in the successful tender offer and look forward to closing the overall investment in January. We have tremendous confidence in Uber's leadership and employees and are excited to support Uber as it continues to reinvent how people and goods are transported around the world."

The deal includes governance changes, including expanding Uber's board from 11 to 17 members, limiting some early shareholders' voting power and cutting the control wielded by former CEO Travis Kalanick, who was forced to resign from his position in June.

"We look forward to working with the purchasers to close the overall transaction, which we expect to support our technology investments, fuel our growth, and strengthen our corporate governance." an Uber spokesman said in a statement.

SoftBank is offering existing Uber investors just under $33 per share in an attempt to purchase up to one fifth of the company, which is a massive a 30 percent discount from the company's previous valuation.

In July of 2017, SoftBank announced an agreement among its shareholders on Uber's investment in the technology sector, adding that it would not advance with this investment if conditions were not "satisfactory." According to Reuters, Softbank has led a consortium with the investment group Dragoneer, whose Uber investment plans are worth between $1 to 1.2 billion.

In November, Softbank first advanced that it would acquire at least a 14% stake in Uber and if the company's shareholders did not intend to sell their shares according to the most recent valuation, the bank could increase its investment. However, this did not occur, leading to Softbank's 30% discount on the deal.

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