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A Look at Uber’s Deal with SoftBank

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SoftBank closed the deal to acquire a stake in Uber

According to a report by the Wall Street Journal, a consortium that includes Tencent Holdings (TCEHY) and is led by Japan’s (EWJ) SoftBank won a bid to buy a 15% stake in Uber Technologies. On December 28, 2017, Uber Technologies was valued at $48.0 billion after being valued at $68.0 billion in 2016.

As part of the deal, the consortium would also give the ride-hailing company ~$1.3 billion in new investments.

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Inside the deal

This deal appears to be a win-win for both companies, as Japan’s SoftBank gained a substantial stake of the world’s most valuable startup at a steep discount to its previous valuation. SoftBank would have two seats on Uber’s board. The steep discount is probably due to the tumultuous 2017 that Uber Technologies experienced.

Uber Technologies has a strong ally in SoftBank, which could help stabilize the company to an extent. Some of Uber’s earliest investors, including Benchmark, have seen substantial gains after the deal.

The Japanese company has backed a number of ride-hailing companies around the world. This trend could mean that Uber Technologies could have a more strategic partnership with those companies. The other ride-hailing companies backed by SoftBank include Ola in India (EPI), Didi Chuxing, and GrabTaxi.

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