SoftBank makes offer for Uber shares at 30% discount

A SoftBank Group-led team of investors has made an offer to buy Uber’s shares in a tender offer that would value the company at about a 30% discount to Uber’s last private valuation of nearly $70 billion, a source with knowledge of the proposed deal tells TechCrunch. We’re hearing that the proposed price per share is $32.96, which works out to under $50 billion.

Bloomberg first reported the latest development, which follows months of talks about both a direct investment in the ride-hailing company at the company’s last private valuation of nearly $70 billion and also a large purchase of the shares of existing shareholders at the lower price.

If Uber signs off on the offer, it will be the approval that’s needed to move forward with what is expected to be the largest secondary transaction in history. Uber already announced a few weeks ago that it’s moving forward with the process, specifically that it “entered into an agreement with a consortium led by SoftBank and Dragoneer on a potential investment.”

It’s a package deal and the $1 billion investment at Uber’s last private valuation is contingent on the secondary happening. The tender would include nearly $9 billion of shares from existing shareholders, the amount needed to get the SoftBank-led group its desired 14% of the company.

We’re told that Uber employees with at least 10,000 of vested share will be eligible to sell. Other Uber shareholders, including venture capitalists, angel investors and former employees could also be eligible.

They are asking the sellers to be “accredited investors,” which is typical for buyers, but less common for sellers. This means that Uber employees who make less than $200,000 in salary, will also need to be worth $1 million to sell their shares (this includes the value of the shares). In other words, you already need to be “rich” to make more money here.

But for those eligible, this will finally give more employees an opportunity to turn paper money into cash.

We’re told it’s also possible that if SoftBank does not find enough sellers at the $32.96 share price, that they may raise the price to meet the desired 14% ownership.

Until recently, most Uber shareholders were prevented from selling. The $1 billion investment in the company will also help the company continue to fuel its growth as it prepares to grow public in 2019.

This is a big moment for Uber, in what has been a very difficult year. Uber has been dealt legal battles, including a patent lawsuit with Alphabet’s self-driving car division, and public outcry about its company culture. Co-founder and CEO Travis Kalanick was pressured to resign in June.

If the deal is completed, investor and board member Benchmark Capital has agreed to drop its lawsuit against Kalanick. The lawsuit related to Kalanick’s power to appoint three board seats, including his own.

Kalanick recently named Ursula Burns and John Thain to those seats. If one of them gives up their spot, Kalanick will require a board vote to appoint a replacement, as long as the SoftBank deal is finalized.

Featured Image: Spencer Platt/Getty Images

Published at Tue, 28 Nov 2017 02:52:59 +0000