SoftBank Offers to Buy Uber Shares at 30% Discount

Japan’s SoftBank Group Corp is offering to purchase shares of Uber Technologies Inc at a valuation of $48 billion, a 30% discount to its most recent valuation of $68.5 billion, a person familiar with the matter said on Monday.

The investment, which was approved by the Uber board in October, would also trigger a string of governance changes at Uber that would limit some early shareholders’ voting power, expand the board from 11 to 17 directors and cut the influence of former Chief Executive Travis Kalanick, Reuters reported.

The investment and board moves are supported by new Chief Executive Dara Khosrowshahi and come at the end of a year of scandals and change for Uber, including the announcement last week that executives covered up a major hack in 2016.

The consortium of investors led by SoftBank and Dragoneer Investment Group plan to take a stake of at least 14% in the ride-services company. The tender offer will launch on Tuesday, sources told Reuters, and investors have nearly a month to respond.

The SoftBank-led investor group will acquire two of the new board seats, with the remaining four going to independent directors.

Another person familiar with the deal said the offer price was in line with what investors had been expecting. SoftBank’s offer is close to what Uber was worth in 2015, when shares were priced a little less than $40 apiece for a $51 billion valuation, according to data from PitchBook Inc.

Even at the discounted price, Uber is the world’s second-highest valued private venture-backed company, after China’s ride-service company Didi Chuxing.

Nearly all secondary transactions, when a new investor purchases from existing shareholders, come at a discount to the company’s valuation.

However, the 30% discount is steep given Uber’s plan to launch an initial public offering in 2019, said Phil Haslett, co-founder and head of investments at secondary marketplace EquityZen. Usually valuation cuts of this size happen when a company is at risk of being sold at a heavy discount, which Uber is not.