SoftBank bids to buy Uber shares for less than current value

While the price is 30 per cent below Uber’s last primary round, according to sources, a slate of investors has agreed to sell shares for the deal

If it succeeds, the SoftBank-led coalition would purchase at least 14 per cent of the shares from existing Uber investors. Simon Dawson / Reuters

Softbank Group and a group of investors are said to be trying to buy a big stake in Uber Technologies at a sizable discount to the ride-hailing company’s $69 billion valuation, seeking to clinch what would be one of the largest ever purchases of stock in a private company.

SoftBank and partners including investment firms Dragoneer Investment Group and General Atlantic are offering to spend more than $6bn for a stake that would value the ride-hailing company at $48bn, or about 30 per cent lower than the valuation it fetched in its most recent round of fundraising, according to people familiar with the deal.

If it is successful, the SoftBank-led coalition would buy at least 14 per cent of the shares from existing Uber investors. The share purchase, along with an additional $1bn direct investment in the company, would make the group one of Uber’s biggest shareholders, said the people, who asked not to be identified discussing the private terms. The SoftBank coalition will receive two board seats if the stock sale is completed.

Locking in the investment from SoftBank has been a top priority for new Uber chief executive Dara Khosrowshahi, who sees the deal as chance to close rifts and land a powerful new ally. The share offer gives existing shareholders a way to sell equity and unlock some of the value that has been difficult to realise as long as the San Francisco-based company puts off an initial public offering. Mr Khosrowshahi has said he expects to take Uber public by 2019.

The tender offer is expected to start today, the people said. While a number of Uber shareholders have agreed to sell shares, this part of the process could last as many as 20 business days, according to the people.

An Uber spokesman declined to comment.

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The expansion of the company’s board and other governance reforms have been attached to passage of the stock sale, upping the stakes. The deal isn’t done, however. Shareholders will need to sell at the $48bn valuation. While SoftBank’s offer of about $33 a share is 30 per cent less than Uber’s valuation at its most-recent fundraising round, the price would represent a significant windfall for many early investors. If shareholders don’t agree to sell in sufficient numbers, SoftBank can raise the price or walk away, the people said.

SoftBank shares fell less than 1 per cent Tuesday morning in Tokyo trading.

SoftBank eyed Uber shares as the ride-hailing company has had an abysmal 2017: the company’s co-founder and former chief executive Travis Kalanick resigned under pressure from investors; its biggest US competitor has gained ground against it; and the company faces a high-profile lawsuit from Waymo, the self-driving unit of Alphabet. SoftBank, which has a $93bn technology investment fund, saw an opportunity to buy shares at a discount.