SoftBank's tender offer for Uber resulted in a resounding success and has convinced stakeholders to offer to sell as much as 20 percent of the ride-hailing service provider, The Wall Street Journal reported Thursday, citing people with knowledge of the development. The Japanese conglomerate set a threshold for its bid at 14 percent and while it's now able to purchase nearly 50 percent more than it originally planned, it's reportedly limiting its offer to a 15 percent stake. The bid placed a 30 percent discount on Uber compared to its 2014 valuation of $68.5 billion which made it the world's most valuable startup, with SoftBank also agreeing to inject $1 billion into the company at its old valuation in an attempt to avoid a scenario in which the firm is severely devalued as a result of the move.
The development suggests many investors in Uber are now prepared to cash out, with SoftBank's offer being beneficial to anyone who backed the company in a period between 2010 and 2013. Early investors like Benchmark Capital and Menlo are understood to be the ones that are selling the largest amount of Uber shares as part of SoftBank's offer and will see a return of approximately 3,600 times their investment. Co-founder and former Chief Executive Officer Travis Kalanick will have his corporate powers limited following the transaction and while he never publicly commented on the matter, it's understood he didn't offer to sell any of his shares to the Japanese suitor.
Despite prompting a major power struggle at Uber that lasted for months, the deal is widely believed to be a victory for both parties; SoftBank's Vision Fund got another major investment at a discount that can be described as significant even if Uber's true value is nowhere close the $68.5 billion mark, whereas the San Francisco-based startup secured a long-term partner that can help it move away from international price wars with competitors and start actually making money, which is something it previously promised will already start doing by 2017 but continues to post massive losses. Given SoftBank's stakes in major ride-hailing companies around the world like Didi Chuxing, Uber's new investor can help mature the global industry and turn it into a profitable segment sooner than if smaller investors waited for various startups to bankrupt one another. SoftBank's tender offer officially expires today at noon PST, after which both companies are expected to officially confirm its results. Uber is currently planning to go public in 2019, according to previous statements made by CEO Dara Khosrowshahi.