Softbank buys large stake in Uber

29 December, 2017, 01:53 | Author: Salvatore Jensen
  • SoftBank buys large stake in Uber: WSJ

The move drops Uber's value by about 30 percent from around $70 billion to $48 billion - a reflection of the trouble that the ride-hailing company has experienced across 2017.

Japanese tech giant SoftBank Group has bought a 20 percent stake in Uber, completing a months-long process, according to the Wall Street Journal. Additionally, SoftBank intends to invest about $1.25 billion in Uber at the higher valuation.

As part of the deal, Uber plans to add six directors, two of whom come from SoftBank, and expand voting rights for all investors.

Kalanick stepped down in June following revelations that his company's culture had become toxic and encouraged sexism and inappropriate behavior. SoftBank is said to be limiting its purchase to 15pc, with other investors to buy the additional shares. While we have yet to learn which investors have cashed out for the price of about $33 a share, Thursday's result is the reward for years of drama at a company that nevertheless saw astronomical growth since its founding in 2009. On Thursday it said that existing investors had agreed to sell enough shares for SoftBank to go through with the transaction. Uber lost $1.46 billion in the third quarter this year, up from $1.06 billion in the previous quarter. The company is also planning an initial public offering in 2019.




"The stockholders did the smart thing", said Erik Gordon, an entrepreneurship expert at the University of Michigan's Ross School of Business. 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.

The Uber deal marks the latest massive investment by SoftBank's $93 billion Vision Fund. Didi last week raised US$4 billion, including some investment from SoftBank. In an earlier report in August, the paper said Uber was losing roughly $9,000 a vehicle, 18 times more than previously believed.

The moves come as Uber concludes a hard year, in which it faced a sexual harassment scandal, investigations by regulators and a lawsuit over allegedly stolen technology, among other challenges.

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