SoftBank Corp placed an offer of 30 percent discount on Uber’s current valuation of $68.5 billion to $48 billion. This move was approved by Uber’s board in October, making the company schedule for changes in its governance structure. Uber’s board is set to expand to 17 directors from 11 directors, and the powers of Travis Kalanick, the CEO of Uber cut to minimize his influence.
This move was supported by the investor consortium that is led by Dragoneer and SoftBank who want to own 14 percent of Uber. Investors have a month to respond to the tender offer which is going to be launched on Tuesday.
SoftBank wants to acquire two seats on the board, while the four remaining board seats go to independent investors. If there won’t be investors who are ready to sell, SoftBank will not take the deal. Alternatively, SoftBank also expects to invest $1 billion in the company at a valuation of $68 billion.
Even at the 30 percent discount, Uber is the second most highly valued company that is privately backed, after Didi Chuxing, a China Ride service company. This opportunity gives early investors an opportunity to cash in for profits, and the employees to turn their paper valued shares to money. This opportunity is best suited for employees and shareholders who have at least 10,000 shares.
However, the 30 percent discount is pretty high considering the plan that Uber has to launch an IPO in 2019. Ideally, these kinds of cuts on price valuation happen when a company is about to be sold, and Uber is not in such waters.
Uber was valued at $68.5 billion a few years ago, and after the valuation, the company has experienced a tough time with scandals and accusations of all kinds. More than a year ago, Uber stated that the data of approximately 57 million customers and 600,000 drivers were stolen. This incident is said to have been covered by Uber who paid two hackers a cash amount of $100,000 to cover it up. After the incident, governments decided to investigate the incident. Softbank is aware of the breach, and SoftBank is said to have factored the incident’s impact as the company negotiates with Uber.