Business Essentials for Professionals


Uber Shares Proposed To Be Bought By Softbank At A Heavy Discount Of 30 Percent v

Uber Shares Proposed To Be Bought By Softbank At A Heavy Discount Of 30 Percent v
Share of Uber Technologies have been proposed be bought by Japan’s SoftBank Group Corp at about 30 percent discounted price to its most recent valuation and for a total of $48 billion, say media reports citing sources.
The influence over the company of the former Chief Executive Travis Kalanick would be reduced, the number of board members of the company would be increased from 11 to 17 directors and the voting power of some f the shareholders would be limited as part of a string of changes in the governance of Uber following the investment – already approved by the Uber board.
Purchasing a stake of at least 14 percent in Uber is the aim of the consortium of investors which is led by SoftBank and Dragoneer Investment Group plan. Other investors would have over a month to respond to the proposal for share purchase after Tuesday when the tender offer is scheduled to be launched according to sources.
Ion the expanded board, two seats would be taken by the SoftBank-led investor group while the rest four will be adorned by independent directors.
SoftBank would have the option of walking away from the deal in case there are not enough interested sellers. A separate $1 billion is also to be invested in the company valued at $68.5 billion by Softbank.
The investors had been expected around the same price that SoftBank is offering, reported the media quoting another source. according to data from PitchBook Inc, in 2015, the share values of Uber was below $40 a share for its $1 billion valuation and the SoftBank’s offer is close to the valuation of the ride hailing company in 2015.
For early investors, the offer is a chance for locking in substantial profits while for the employees, it offers a chance to cash in shares which only possessed value on paper till date. After the valuation of ride-service company Didi Chuxing of China, Uber sits at the top as the second-highest valued private venture-backed company in the world even at the low discounted price. Those shareholders and employees who possess at least 10,000 shares of the company are eligible to sell their shares.
However, according to Phil Haslett, co-founder and head of investments at secondary marketplace EquityZen, given the fact that Uber plans to make an initial public offering in 2019, the 30 percent discount is quite high. Typically, these types of heavy discounting occurs when a company is risking being sold out – which obviously Uber is not.
“It really comes down to a re-pricing of Uber’s value,” Haslett said.
Just recently, Uber revealed that the company had paid about $100,0000 to cover up a data breach that included data theft of 57 million Uber customers and 600,000 drivers. The incident had happened a year ago. there have been a series of investigations by governments across the world since that revelation.
But before Uber had come forth public with the data breach, it had already informed SoftBank, the company said on Friday. However, “our information at the time was preliminary and incomplete,” a spokesman said.

Christopher J. Mitchell

Markets | Companies | M&A | Innovation | People | Management | Lifestyle | World | Misc