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SoftBank Wants To Buy Uber Shares At 30 Percent Off: Should Uber Investors Take The Offer?

28 November 2017, 8:45 am EST By Aaron Mamiit Tech Times
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These companies had a terrible 2017

SoftBank and a group of investors are looking to buy Uber shares at 30 percent off, as part of the massive $10 billion investment that was announced earlier this month.

It is unclear if the SoftBank investment will solve all of the many Uber problems. However, even with a significant discount, the ride-hailing company might want to lean toward accepting the offer.

SoftBank Seeks 30 Percent Discount To Uber Shares

According to a Bloomberg report, a consortium of investors led by SoftBank has offered to purchase Uber shares that will value the ride-hailing company at $48 billion. The figure is 30 percent lower compared to the nearly $70 billion valuation that Uber fetched in its most recent fundraising round.

"SoftBank's expectation that it can get shareholders to part with their shares at about $50 billion builds in all the negative news," said New Street Research analyst Kirk Boodry. For Uber, the negative news forms a long and troubling list.

The most recent controversy surrounding Uber surfaced just last week, when the company revealed that in 2016, hackers stole information from 57 million accounts held by drivers and customers. The worse part is that Uber paid the hackers $100,000 to keep it a secret, as the company dressed up the incident as part of its bug bounty program.

SoftBank was informed of the data breach before everyone else, though. Uber decided it would be best to disclose the data breach to the consortium, as it dangles $10 billion of investments before letting affected users know about the hack. In any case, the incident likely played a part in SoftBank's decision to seek a 30 percent discount for the shares that it plans to purchase in Uber.

Will SoftBank Investment In Uber Proceed?

If Uber agrees to the offer, what is expected to be the largest secondary transaction in history will move forward. SoftBank's group is looking to buy at least 14 percent of Uber's outstanding shares.

Under the previously reported investment, the SoftBank-led consortium will pour $1 billion directly into Uber and $9 billion more through a tender offer that will seek to acquire shares from other Uber stakeholders.

While some Uber investors said that they would agree to sell their shares, several others have privately expressed their unwillingness to let go of Uber shares at such a price. If SoftBank is not able to acquire a 14 percent stake in Uber through the tender offer, it could try increasing its bid to attract more sellers.

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