3 ms·

I may be falling for a nice perception play from Uber, but I took this more-or-less at face value: Softbank is buying up a lot of valuable property at the momen

I may be falling for a nice perception play from Uber, but I took this more-or-less at face value: Softbank is buying up a lot of valuable property at the moment, and even though Uber wouldn't be raising again for another 6-12 months, they wanted a piece. This is the mechanism they managed to negotiate. Early shareholders gain liquidity, Softbank gets cheap stock, and the market gets some bullish signals on Uber in the form of Softbank's backing. From the outside it looks like a pretty good deal. Of course there might be internal panic and I've got it all wrong, but I see some big wins for both parties.

deleted 9y ago
[deleted]
ethbro 9y ago
I'm curious about whether a sale like this included full due diligence or if the extra-ordinary nature meant some other standard of accounting was used. If SoftBank went in with eyes open, this seems business as usual. If they're rushing after the cool kid on the block, then this starts to sound like Theranos 2.0.
- linkregister 9y ago
  SoftBank has been equivocating for months over this deal. It has been in the works long before the current Uber CEO arrived. They are structuring a deal that is advantageous to themselves, exploiting Benchmark’s desire for an exit so they can pay its investors their returns. SoftBank is getting extremely cheap debt at the moment, so it makes sense to take advantage of shareholder turmoil to get valuable companies at a discount. With this purchase, SoftBank will have a hand in every significant ride sharing other than Lyft.
  - simonrobb 9y ago
    > exploiting Benchmark’s desire for an exit Does that imply that they'll be buying Benchmark's stock, rather than employees'? > SoftBank is getting extremely cheap debt at the moment That sounds like some interesting background to the deal, please expand if you have more detail!
    - linkregister 9y ago
      SoftBank raised $93B in equity from investors. It also issued about $5B in bonds in July, as well as a large amount of loans from Japanese and East Asian banks (over $25B). The rates are extremely favorable despite the high risk associated with SoftBank's investments. I'm bullish on SoftBank, but it's indisputable that it's gotten a hell of a deal. The upside for the banks is they get their principal + interest back. The downside for the banks is that they lent the cash at low-risk rates for high-risk assets.

deleted 9y ago

[deleted]

ethbro 9y ago

I'm curious about whether a sale like this included full due diligence or if the extra-ordinary nature meant some other standard of accounting was used. If SoftBank went in with eyes open, this seems business as usual. If they're rushing after the cool kid on the block, then this starts to sound like Theranos 2.0.

linkregister 9y ago
SoftBank has been equivocating for months over this deal. It has been in the works long before the current Uber CEO arrived. They are structuring a deal that is advantageous to themselves, exploiting Benchmark’s desire for an exit so they can pay its investors their returns. SoftBank is getting extremely cheap debt at the moment, so it makes sense to take advantage of shareholder turmoil to get valuable companies at a discount. With this purchase, SoftBank will have a hand in every significant ride sharing other than Lyft.
- simonrobb 9y ago
  > exploiting Benchmark’s desire for an exit Does that imply that they'll be buying Benchmark's stock, rather than employees'? > SoftBank is getting extremely cheap debt at the moment That sounds like some interesting background to the deal, please expand if you have more detail!
  - linkregister 9y ago
    SoftBank raised $93B in equity from investors. It also issued about $5B in bonds in July, as well as a large amount of loans from Japanese and East Asian banks (over $25B). The rates are extremely favorable despite the high risk associated with SoftBank's investments. I'm bullish on SoftBank, but it's indisputable that it's gotten a hell of a deal. The upside for the banks is they get their principal + interest back. The downside for the banks is that they lent the cash at low-risk rates for high-risk assets.