Global Rideshare Leader Raises $10 Billion in Strategic Notes Offering

The prominent rideshare and delivery platform announced today the pricing of its $10 billion offering of exchangeable senior notes, split between two maturity dates in a move that significantly bolsters the company’s financial position.

Offering Structure and Terms

The offering consists of $5 billion in exchangeable senior notes due 2029 with a 0.25% interest rate, and another $5 billion in exchangeable senior notes due 2031 carrying a 0.50% interest rate. Both sets of notes will be exchangeable under certain conditions into cash, shares of the company’s common stock, or a combination thereof.

The initial exchange rate for the 2029 notes is 12.8928 shares per $1,000 principal amount, equivalent to approximately $77.56 per share. For the 2031 notes, the initial exchange rate is 12.7795 shares per $1,000 principal amount, approximately $78.25 per share.

These rates represent premiums of 35% and 36% respectively over the volume-weighted average price of the company’s common stock on May 13, 2024.

Strategic Financial Objectives

The transportation technology company intends to use the proceeds from this significant offering primarily for share repurchases, with approximately $7 billion allocated for buying back common stock from institutional investors participating in the notes offering.

Additionally, funds will be directed toward addressing the company’s 0% Convertible Senior Notes due 2025 and for general corporate purposes. The transaction is expected to close on May 16, 2024, subject to customary closing conditions.

Market Impact and Industry Context

This substantial financial maneuver comes as the mobility sector continues to evolve following post-pandemic recovery. The company’s decision to raise capital through exchangeable notes rather than direct equity offering suggests a strategic approach to optimizing its capital structure while maintaining financial flexibility.

Industry analysts note that the favorable interest rates secured in this transaction indicate continued strong institutional confidence in the long-term prospects of the rideshare leader, despite ongoing regulatory challenges in various markets worldwide.

The repurchase component of this transaction may also signal management’s belief that the company’s current share price represents an attractive valuation relative to future growth potential.