Softbank to buy Uber and Lyft

Softbank’s billionaire CEO Masayoshi Son declared his company’s interest in acquiring Uber, and expressed his interest in rising an offer for its main rival, Lyft

Softbank to buy Uber and extend and offer for Lyft

The Japanese bank has been at the center of the financial world since it allied with the government of Saudi Arabian and private investors to form the tech fund, Vision Fund, a 100 billion operation that seeks to invest in the United States, being closely allied with Donald Trump’s administration.

The Softbank Group operates on landlines, mobile phone, broadband, digital television, digital media, and the Internet. The company has revenue of 81.8 billion dollars, an operating income of 8.89 billion dollars and total assets for 225.59 billion dollars. Its subsidiaries include: SoftBank Corp with an ownership of 99.99%, the Sprint Corporation with a share of 80% and Yahoo! Japan with an ownership of 35%.

According to NASDAQ, the car sharing market could hit 16.5 billion dollars by 2014, a 40% increase from its 2016 values, which generates an interesting opportunity for investors.

Uber is the leading carpooling service worldwide; it operates in 633 cities worldwide and has a total revenue of 6.5 billion dollars. Despite its success, Uber has had internal administrative turmoil as its CEO Travis Kalanick was fired in the middle of broad protests due to his participation in Trump’s economic council and scandals derived from his strong temper. Markets have downgraded their trust in Uber since.

Uber’s main competitor, Lyft, is a transportation network company created in San Francisco, California by Logan Green, its current CEO, and John Zimmer, its president. The company presented a net income of minus 600 million dollars in 2016 and a total revenue of 700 million dollars. Still, the growing company is valued at 7.5 billion dollars and is taking over since Uber’s pace has slowed down recently.

Given Softbank’s disruptive innovation guidelines, the move for Uber and Lyft may represent a big move for global markets as the public is uncertain about the extent by which the bank could reshape the current carpooling industry. The Japanese bank already has stakes on the carpooling industry as it moved towards a stake in the Indian 150 million dollars in revenue of the company “Ola”, India’s main car sharing service, and “Didi Chuxing”, also a vehicular service from China, which has a 12.94-billion-dollar equity funding and operations in 400 major Chinese cities.

Economically speaking, every company produces revenues in two ways, both cutting costs and maximizing sales. If Softbank acquires a significant share of the world’s carpooling services, once distant companies would now share headquarters and, from an administrative standpoint, lower costs. In addition, a coordinated policy to increase sales with leverage of the bank’s strong technological platforms may boost confidence in the services and increase the total market share.

Masayoshi Son declared that “life is too short to do something small”. This move could surely determine the leadership in the transportation sector for the coming years.

 

Latin American Post | David Eduardo Rodríguez Acevedo

Copy edited by Susana Cicchetto

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