Ride-hailing company Uber Technologies Inc.’s losses widened during the third quarter of this year, suggesting that the transport provider may be having difficulty in generating profit as it faces tough competition, as well as a number of legal and regulatory pressures across the globe.
People familiar with the matter stated that Uber’s net loss rose to $1.46 billion in the third quarter, nearly adding 38 percent from last quarter’s $1.06 billion.
Net revenue on the other hand, gained 14 percent to $2 billion, while gross value of its bookings from rides increased 11.5 percent to $9.7 billion on a sequential basis.
With Uber being a private business, it does not need to disclose its earnings in public.
The figures were shown to several shareholders as part of a tender offer made by a consortium led by Japanese telecom company SoftBank Group Corp.
SoftBank Launches Tender Offer for Uber’s Shares
A source with knowledge of the matter said that SoftBank is looking to buy a huge portion of Uber’s shares from current investors at $48 billion, which is 30 percent less than the current valuation of $68.5 billion, though it can still be adjusted to persuade more people to sell their shares.
The investment could mean that Uber is getting support from a notable investor as it tries to tackle a number of controversies.
Two of the transport tech group’s major shareholders, including California-based venture capital firms Benchmark and Menlo Ventures have already agreed to sell some of their shares. Benchmark currently owns 13 percent or almost $9 billion of Uber’s stake.
Details with regards to the exact amount that both firms are prepared to sell has so far not been made clear.
Other remaining bidders include San Francisco-based investor Dragoneer Investment Group, Australian telecom company TPG Telecom, Chinese internet group Tencent Holdings Ltd., and American venture capital company Sequoia Capital.
The tender offer started on Tuesday and investors will have about 20 business days to choose whether they want to sell their shares or wait for a potential public offering (IPO) in 2019 instead. The whole tender process is expected to close by late February.
Another source stated that SoftBank is also planning to directly invest $1 billion in Uber at the $68.5 billion valuation on the condition that it will acquire 13.4 percent of the ride-services group’s shares through the tender.
Investors have to buy at least 13.4 percent of Uber’s shares from existing shareholders for the deal to close.
SoftBank has also the option to withdraw from the transaction if there are not enough sellers.
Moreover, this investment of the Tokyo-based telecom company might be the last private round before Uber’s IPO as it hopes to join the stock market in 2019.
If the investment goes through, it would lead to several changes in Uber, such as increasing the board from 11 to 17 members, containing some of the early shareholders’ voting power, and minimizing the authority implemented by its former chief executive Travis Kalanick.
This would also mark as the largest acquisition of stock in a private company and would make SoftBank as one of Uber’s biggest shareholders.
The latest market happenings are here at FSMNews. Subscribe now to FSMNews and get the freshest information on forex, commodities, stocks, technology, economy and a lot more.