Uber's valuation could be significantly slashed after SoftBank deal

29 December, 2017, 02:21 | Author: Kathy Ellis
  • A consortium led by Soft Bank Group Corp will buy a large number of shares of Uber Technologies Inc in a deal that values the ride-services firm at $48billion

An Uber spokesman confirmed the $48 billion valuation in an emailed statement.

The offer values Uber at $48 billion, down from the company's $68 billion valuation in June 2016.

The investor group is also buying about $1.25bn worth of new shares at a price that values the firm at nearly $70bn, a significantly higher price that is similar to what Uber shares fetched in its last fundraising round.

SoftBank had been seeking a stake of at least 14 percent in the deal. Dara Khosrowshahi, a former travel industry executive, became Uber's new C.E.O. in August, and said his top priority was ending the public fights between board members and Mr. Kalanick, who had been trying to retain some control over the company he helped found. The company is also planning an initial public offering in 2019. It will also put in motion a slate of governance reforms that were dependent on the deal going through, which will expand the board to 17 and revoke outsize voting power given to early backers. Employees and investors allegedly tendered shares representing 20% of the company. "The price is less important than locking in the governance changes and securing the support of the world's most powerful technology investor", said Erik Gordon an entrepreneurship expert at the University of Michigan's Ross School of Business.

A group of Uber shareholders holding high volumes of company equity agreed to sell a significant stake to SoftBank, a Japanese multinational technology and telecommunications firm, allowing the deal to go through.

SoftBank founder Masayoshi Son has taken a keen interest in ride-hailing companies around the world
SoftBank founder Masayoshi Son has taken a keen interest in ride-hailing companies around the world

"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", he added.

SoftBank first publicly expressed interest about investing in Uber over the summer, while the startup was still looking for Kalanick's replacement.

SoftBank has previously pumped billions into several ride-hailing companies overseas, including Didi in China, Grab in Southeast Asia and 99 in Brazil.

The Uber investment comes after a year of troubles for the company, including a lawsuit by Alphabet Inc's self-driving vehicle unit Waymo that alleges trade-secrets theft and federal investigations that span possible bribery of foreign officials in Asian countries and the use of software to evade regulators.

Over the past year, a former employee's charges of endemic sexual harassment led to an internal review, the mayor of London said he would strip Uber of its licence and Uber revealed it had covered up a major hack.

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