Report: Uber in talks with SoftBank for a partial sale of its stake in Didi Chuxing

Uber Technologies Inc. is reported to be in talks to divest part of its shares in Chinese ride-hailing giant Didi Chuxing Technology Co., according to a report Thursday.

Bloomberg, referencing people familiar with the matter, said the private discussions are being led by Uber Chief Executive Officer Dara Khosrowshahi, with both Didi and SoftBank Group Corp. involved. SoftBank is an investor in both companies. One option on the table is for SoftBank to team up with other investors to acquire a minority of Uber’s 15% stake, with the deal requiring approval from Didi to go ahead.

Uber acquired the shareholding, originally 18.8% but since diluted when it sold its Chinese business to Didi, in 2016. Didi has gone on to expand since that time into various countries where it competes directly with Uber — Australia, Japan, Brazil, Mexico, Costa Rica, Chile, Colombia and Panama.

The motivation by Uber to sell part of its stake in Didi is reportedly driven by a desire to boost its own share price, but the timing is somewhat odd. Although Bloomberg notes that Uber stocks are currently trading below its initial public offering price of $47 per share — shares were at $37.06 as of the close of regular trading today — Uber’s move comes amid reports that Didi is gearing up for its own IPO.

Didi’s plans to go public were first reported July 20. The company is considering a listing in Hong Kong by the end of the year on a likely valuation of more than $80 billion. Coming into its IPO, Didi has raised about $21.2 billion, including megarounds of $5.5 billion in April 2017 and $7 billion in June 2016. Notable investors include SoftBank along with Toyota Motor Co. and Booking Holdings Inc.

Did was hit by the COVID-19 pandemic early on in its home territory of mainland China, but it has since rapidly recovered, having reached a new milestone of 50 million global daily trips Aug. 25. So Didi is well placed to go public with strong fundamentals, begging the question: Why would Uber be holding talks to sell a part stake now?

At an estimated $80 billion IPO valuation, Uber’s stake in Didi is worth $12 billion, though it’s currently valued at $6.3 billion. Added to that is further potential upside in an age where tech stocks are seeing first-day returns for market debuts at their highest level since the tech bubble of 1999. So a deal would give Uber cash in the hand sooner, but the downside is the loss of potential gains if it waits a few months for Didi’s IPO.

Uber’s talks to divest some of its Didi stock follows a report earlier this week that Southeast Asia ride-hailing companies Grab Taxi Pte Ltd. and Gojek are holding merger talks. Uber holds a minority stake in Grab after it sold its Southeast Asian business to the company in 2018.

Photo: Didi Chuxing

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