Warren Buffett Investment Plan of $3 Billion in Uber Technologies Inc. Failed

Company - Mohit Shah - May 31,2018

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warren buffett investment plan of 3 billion in uber technologies inc failed

Non-Tech Investor Warren Buffett has been in talks these days because he had planned to invest $3 billion in Uber Technologies Inc. earlier this year, but the talks failed following disagreements over this mega deal’s terms.

It has been reported that Uber and Berkshire Hathaway disagreed on the terms and size of the deal, according to the report, so Uber tried to talk Buffett into a slighter stake. In fact, the legendary investor has said that “I'm a great admirer of [Uber CEO Dara Khosrowshahi]”. Mr. Buffett has also confirmed that his company Berkshire Hathaway held discussions with Uber.

In February, Uber was valued at $72 billion. On the other hand, in the recent past, Uber has been working to find its footing after controversies over its culture and the fatal crash of one of its self-driving cars in March. In this scenario, a successful investment by Buffett could have given Uber a much-needed positive boost, as companies such as Apple Inc. and Teva Pharmaceuticals, have freshly received stock boosts after Buffett’s bigger stakes were revealed. It has been reported that due to this activity Apple is now considered as one of Berkshire's largest holdings.

It is a major fact that Buffett has a history of bailing out companies in crisis, but has historically stayed away from tech deals. He accepted earlier this month that he was "wrong" in passing on Google and Amazon. That said, the billionaire may view Apple and Uber less as technology companies than strong brands with loyal customers.

Coming back to the ride-sharing company agreement with Buffett, it has been reported that under the proposed agreement, Berkshire Hathaway would have provided a convertible loan to Uber that would have protected Buffett’s investment should Uber hit financial straits, while providing an important advantage if Uber continued to grow in value. During negotiations, Uber’s CEO Dara Khosrowshahi proposed decreasing the size of the deal from $3 billion to $2 billion, in a desire to get Buffett’s backing while giving him a potentially smaller share of the company. But, the deal fell apart after the two sides couldn’t agree on terms, one of the people from the meeting said.

Investors also pay devotion when Buffett unloads stock. Lately, he sold off shares in GE (GE) and IBM.