At $45 Billion Price, SoftBank Talks Enflame Uber Tensions By Jessica E. Lessin, Serena Saitto and Amir Efrati Aug. 04, 2017 1:10 PM PDT Share Three weeks ago, Benchmark partners Matt Cohler and Peter Fenton flew into Sun Valley, Idaho for a private meeting with Masayoshi Son of SoftBank, according to three people told about it. On the outskirts of the annual Allen & Co. media confab, the group tried to hammer out a deal for SoftBank to buy shares in Uber from existing investors including Benchmark. That proposed deal has become the latest lightning rod around drama at Uber. The transaction on the table around that time: SoftBank would purchase Uber shares from existing shareholders at a price that would value the company between $40 billion ($27 to $28 a share) and $45 billion ($31 to $32 a share). Additionally, SoftBank would invest $1 billion at the latest preferred valuation of around $70 billion and get some board seats. THE TAKEAWAY SoftBank’s proposed offer for Uber shares, which valued the company at $45 billion, has inflamed tensions among Uber’s shareholders. Some see it as a ploy by former CEO Travis Kalanick to orchestrate a comeback but others say it was an effort by Benchmark to cash out. As of now, a deal—the secondary portion of which would be structured as a tender offer to shareholders broadly—seems unlikely. Early shareholders think the company is worth more; they say that the board approving such a deal without a CEO could breach its fiduciary duty. These people told The Information they think Uber could be worth $90 billion or more next year—and say that the company has a plan to stem its losses, which totaled $700 million in the last full quarter alone. Another complication is how SoftBank would come up with the money. Both the company and its flush $100 billion Vision Fund have stakes in Uber rivals, including Grab, Didi Chuxing, 99, and Ola. SoftBank would likely need those companies’ approval to invest in a rival. Additionally, a large investment from Vision Fund would require approval from Vision Fund LPs, which include Apple, Qualcomm and the Public Investment Fund of the Kingdom of Saudi Arabia. Under one scenario discussed, SoftBank could fund a deal with a loan collateralized by its Alibaba shares. The initial loan would go towards buying Uber shares, which would be used as collateral for more money to purchase more shares and so on. Yet the SoftBank transaction, which at least some board members believe isn’t dead, remains important for what it represents. Some early Uber investors have painted the proposed deal as a ploy by former CEO Travis Kalanick and his friends to orchestrate a comeback, dilute existing shareholders and gain influence on the board by trying to control new seats that SoftBank would gain in the deal. Others close to the former CEO say that the opposite is true: that the deal is an effort by Benchmark to cash out and lock in its gains. The reality, based on interviews with seven people involved in the discussions, is somewhere in the middle. The competing narratives show how tensions remain high at the ride-hailing company that is trying to find a new leader and move beyond scandal. Benchmark began talking to SoftBank, without Mr. Kalanick knowing, a few weeks before forcing the CEO’s resignation in June. But since then Mr. Kalanick, who still wields significant power as a large shareholder and board member, has come to like the idea of a deal, for a number of reasons. It could prevent SoftBank from spending its capital to further embolden Uber’s rivals, among other things. If a deal could be reached, it could represent a rapprochement of sorts between Mr. Kalanick and Benchmark, which orchestrated his ouster after scandals exposed how sexual harassment and unsavory business tactics proliferated under his watch. But the fact that people close to both sides are pedalling competing narratives around the deal and its status demonstrate the continued tension. Benchmark and Mr. Kalanick own roughly the same percentage of Uber’s shares—more than 10% each—and both have what’s called supervoting shares that give them outsized influence on company-level decisions such as whether to sell it. Mr. Kalanick and Bill Gurley, the Benchmark partner who sat on the board until recently, have had a different approach to big strategic questions for years. Gurley's Pressure Mr. Gurley, a former Wall Street research analyst, is methodical and has long pressured the company to play it safe. For example, Mr. Gurley, an early investor in food delivery services GrubHub, voiced repeated concerns during board meetings about Uber expanding into UberEats, which is today around a $1 billion annual gross revenue business that could more than triple next year. Mr. Gurley has since changed his stance and now supports it. He, along with other Uber investors, were similarly cautious about opening up in China. Uber’s sale to Didi now looks smart, as its stake is worth close to $10 billion on paper. After word of the SoftBank deal was reported by Bloomberg a week after Sun Valley, investors, including Tencent, expressed interest in participating. In recent months, as Uber has been rocked by scandal, hordes of investors have been circling to see if shares might be bought at a discount. Uber hired Goldman Sachs to advise on the possible transaction. While some insist that a deal could be reached without a CEO, that seems unlikely given some investors’ concerns that a price could be much higher if a CEO were in place. And on that CEO search, Mr. Kalanick and Benchmark have not seen eye-to-eye. In recent weeks, Benchmark pushed Hewlett Packard Enterprise CEO Meg Whitman and advocated fast-tracking her appointment as CEO. Mr. Kalanick and his friend and board member Arianna Huffington were reluctant to push up the time-table. News of Ms. Whitman’s candidacy leaked, and Ms. Whitman pulled out. The board is interviewing a handful of remaining candidates.
Deal is cold https://www.cnbc.com/2017/07/31/softbank-talks-to-invest-in-uber-are-dead-sources-tell-cnbc.html
Stop putting out click bait headlines. They wanted to invest at $70B (which would be the new valuation per the basis of how startups are valued) and they gave an option to provide liquidity to existing shareholders at $45B -- which we rejected.
Sorry Mr. Trump.
OP - you could've posted this info on the Uber room.. we could've debated heavily on it like a family. Broadcasting such information hurts all of us. If not in kind, it hurts what little credibility we have left.
Do you not realize it's already in the news?
Dude! You ara stupid. This is public news
House of cards
So not sure what this means for Uber
this reeks of Uber keeping up a fake public valuation, hence fooling and cheating employees. SoftBank can buy shares aT $27 in private if they also buy shares at $50 in public, hahaha
It’s all part of the game plan of house of cards
> and say that the company has a plan to stem its losses, which totaled $700 million in the last full quarter alone. Less is more! Buh-bye ATG and maps creation. These benchmark fools will cut these programs, have us in the black for 2 quarters, IPO and cash out leaving us with no investment in our own future. We'll be trading at $17 within a year. Fuck these guys.
Uber is worth much less - anyways uber knows and that’s why they are now giving more salary base - at some point recruiters were lying to everyone - this will be 200 billion in a few months etc
Hi disgruntled ex-Uber
My recruiter told me $1 trillion valuation in a few years
SoftBank would invest $1 billion at the latest preferred valuation of around $70 billion and get some board seats.
Cool aids, anyone?
Out of words?