Uber's losses said to widen to US$1.46b in Q3

Logo of the ride sharing service Uber seen in front of its headquarters in San Francisco, California. PHOTO: AFP

SAN FRANCISCO (BLOOMBERG) - Uber Technologies's net loss widened to US$1.46 billion (S$1.97 billion) in the third quarter, according to people with knowledge of the matter, a sign that the ride-hailing leader is finding it harder to eke out a profit amid competition from rival Lyft and a host of legal and regulatory pressures.

The San Francisco-based company reported financials to shareholders as part of the formal bid on Tuesday night (Nov 28) from a SoftBank Group-led consortium looking to buy a large block of stock. SoftBank said in an emailed statement that at least two of the company's early backers intend to sell. The deal would value Uber at US$48 billion, a 30 per cent discount to the last private valuation.

General Atlantic and Russia's DST Global, which had both been in talks to buy shares, dropped out of the deal, said one person, who asked not to be identified because the details are private. The remaining bidders in the group are SoftBank, Dragoneer Investment Group, TPG, Tencent Holdings and Sequoia Capital, which are looking to buy at least 13.4 per cent of outstanding shares, said two people.

"SoftBank and Dragoneer have received indications from Benchmark, Menlo Ventures, and other early investors of their intent to sell shares in the tender offer," a spokesman for SoftBank wrote in an emailed statement. "Any sales by these shareholders will be pursuant to the same terms and conditions as will be offered to all other eligible holders that participate in the tender offer."

Gross bookings, the key yardstick of demand for Uber's ride services, rose to US$9.71 billion in the period that ended in September, compared with US$8.74 billion in the second quarter, said the people. The net loss in the second quarter was US$1.06 billion.

Uber has had a rough year, with its co-founder and former CEO resigning under pressure and the company admitting it concealed a hack that exposed personal data of 57 million customers and drivers. Lyft, meanwhile, is gaining market share.

The investor group, which hopes to snap up Uber shares on the cheap, offered to pay US$32.97 a share in their opening salvo, said people with knowledge of the matter. They may increase the bid or walk away if seller demand is insufficient. SoftBank has committed to invest at least another $1 billion in Uber at a higher valuation of US$69 billion if the deal goes through. The blended valuation in the total deal would be US$54 billion, the person said.

The consortium of buyers have about four weeks to lock in enough investors at the current share price or to offer a higher price. The entire tender process is supposed to conclude by late February.

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