SoftBank is "very likely" to complete its multi-billion investment in Uber next week, according to Arianna Huffington, board member of the ride-hailing service provider. While speaking at the WSJD conference on Monday, Ms. Huffington revealed that the largest private share purchase in history is close to being finalized, with her comment on the matter coming shortly after Uber's board voted to go through with the deal. Following the transaction, SoftBank will own up to 20 percent of the company which is presently valued at approximately $69 billion, thus still being the most valuable startup on the planet.
SoftBank's aggressive approach raised many tensions at Uber and among some of the company's smaller investors who believe that the Japanese tech giant will devalue the firm seeing how it's seeking to purchase its privately traded shares at a significant discount. The Vision Fund is presently seeking to acquire some of Uber's existing shares at a valuation that's closer to $45 billion but would also purchase a new set of company-issued stock at a price closer to the $69 billion figure, according to previous reports. While selling stock at two different valuations would be impossible for a publicly traded company, the somewhat nature of Uber's existing ownership structure allows the company to do precisely that, with SoftBank pushing to capitalize on that state of affairs in exchange for buying a smaller portion of shares at a non-discounted price and injecting some additional cash into Uber following the deal. Despite some of Uber investors being unhappy with the conditions offered by the Japanese conglomerate, others saw SoftBank's approach as an opportunity to cash out while Uber is still riding its $69 billion valuation which not all industry watchers believe will hold up in the medium term.
Uber is still far from a profitable business despite its revenue growth outpacing its losses in recent times, with the company's business model largely depending on its advancements in the self-driving segment and being among the first tech giants to do so. That particular goal could be prevented as a result of the company's present legal dispute with Alphabet's Waymo if the Mountain View, California-based autonomous vehicle manufacturer manages to prove that Uber's driverless cars are using its protected LiDAR designs. The uncertainty surrounding Uber's future is one of the main reasons why the ride-hailing startup is now keen on taking more cash from investors, with Ms. Huffington specifically describing the move as a strategic decision intended to ensure the company's sustainability in the long term.
Ms. Huffington on Monday also reflect on the global ride-hailing industry and projected some major consolidations are to take place on this front in the near future, possibly signaling that SoftBank is interested in merging some of Uber's foreign operations with other startups in which the Japanese tech giant invested in the past. Uber's existing talks with SoftBank are now solely focused on setting the exact price the Vision Fund will pay for a stake in the San Francisco, California-based company, Ms. Huffington confirmed, with previous reports indicating that SoftBank could be required to pay as much as $10 billion for a fifth of the startup. The price that the suitor manages to negotiate will directly affect its share of Uber that could also be as low as 14 percent if the deal was to go through at a relative premium compared to what SoftBank is presently proposing, industry insiders recently said.
If the two manage to come to a definite agreement, Uber's Board of Directors would be expanded by six more seats and the company would pledge to go public by 2019, which is something that its new Chief Executive Officer Dara Khosrowshahi already said was his goal regardless of any additional investments. SoftBank often praised the ride-hailing revolution and its effects on the global economy, with the company's proposed investment having the potential to put it at the forefront of this wave of technological advancements through significant stakes in numerous major ride-hailing service providers around the world. The investment also isn't expected to be delayed by the existing power struggle within Uber itself, with ousted CEO Travis Kalanick recently appointing two new board members to fill the remaining empty seats at the firm in a move that Mr. Khosrowshahi deemed "disappointing." Uber may file for an IPO as soon as next year if it's adamant to go public by 2019.