SoftBank starts acquisition of significant stake in Uber

SoftBank has formally started its process of acquiring a significant stake in Uber with an offer to purchase shares valued at $48 billion, much below the $70 billion valuation that the ride-hailing company garnered in its last round of fund-raising, two people briefed on the matter said. They asked not to be named as the process is confidential.

The price is known as the opening bid in what is called a tender offer, in which a company makes a public offer to purchase stock from existing shareholders. The tender offer will not be complete for weeks and the price for Uber could fluctuate until the process is complete.

But any discount would be a comedown for Uber, which is the most highly-valued private company in the world. The ride-hailing service has been making plans to go public by 2019, and investors are intensely interested as to whether Uber can maintain a high valuation before it goes for an initial public offering.

According to commentators, the tender offer could not have come at a worse time for Uber, which has been rocked by a major infringement lawsuit by Google affiliate Waymo, a series of scandals and a leadership change this year. Last week, Uber also disclosed that it had covered a security breach that had compromised the personal data of 57 million rider and driver accounts.

SoftBank and partners, including investment firms Dragoneer Investment Group and General Atlantic, are offering to spend more than $6 billion for a stake that would value the ride-hailing company at $48 billion, 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, Bloomberg reported.

If it is successful, the SoftBank-led coalition would buy at least 14 per cent of the shares from existing Uber investors. With purchase and an additional $1 billion in direct investment in the company, the group would emerge as one of Uber's biggest shareholders. The SoftBank coalition would get two board seats if the stock sale is completed.