Softbank wants the competing portfolio companies to lose less money and merge in some cases.
This is the news from the Financial Times, which reported that Uber and DoorDash discussed the merger last year. The talks didn't end with a deal.
The two companies, both strongly supported by SoftBank and its formerly active vision fund, compete with high costs in the area of food delivery. ubers Eats business converted an adjusted net sales of $ 392 million to an adjusted loss of $ 316 million in the third quarter of 2019. Because of this ocean of red ink, DoorDash's reported $ 450 million operating loss forecast for 2019 looks modest.
Perhaps they would lose less money by merging the two companies and could therefore better return to their original IPO rating or defend their existing private rating.
Uber is known to have struggled to maintain its value after going public and has lost its value during the public offering and since its debut. DoorDash, accordingly, it is said to have been on the market recently, but was unable to complete a new, large round of financing. And a combination makes sense in the competition between the two companies. This is all the more true if you consider the common shareholder.
Uber and DoorDash are not the only examples of SoftBank companies cashing each other out of the Vision Fund.
According to a report published today in the Wall Street Journal, a struggle is raging in Latin America between several companies supported by SoftBank:
Uber is besieged in a bloody price war in Latin America, in which the alleged rivals Rappi and China's Didi Chuxing Technology Co. are. But here's the turn. All of the combatants have the largest owner, the same technology investor, the Japanese SoftBank Group Corp., which has invested a total of $ 20 billion in the three.
In the pre-unicorn era, you will remember the old risk maxim that no single group should invest in competing players. So why pay for a portfolio company to beat another startup that you've already helped finance? SoftBank ignored this rule with its own investments and the Vision Fund and is now financing brilliant clucking on the various American continents. (However, there are some examples of other companies doing this, such as Sequoia, that put money in Uber and Didi.)
For this reason, you may want DoorDash and Uber to work together. It could relieve a headache. Then SoftBank could figure out how to stop Uber and Didi from beating each other on rides in other markets while Uber Eats is unraveling and Rappi from a shipment scrapped even more.
Maybe SoftBank wants all players to merge into a single mega delivery and ride corporation. Of course, that would never be overlooked by regulatory oversight, but at least it would summarize the losses and money consumption in a single profit and loss account.
Think about the time it would save!