Didi addresses rumors about going private

Akiko Fujita joins Myles Udland, Brian Sozzi, and Julie Hyman to discuss the consequences of China’s continued scrutiny towards Didi stock and Uber shares dropping due to Softbank’s plan to sell shares to cover Didi losses.

Video transcript

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JULIE HYMAN: The latest on the seeming war between Didi, the ride hailing service, and the Chinese government. A report this morning that the company might now take itself private. Although, it's saying maybe that's not the case. Our Akiko Fujita is here to try and untangle all of this for us, Akiko?

AKIKO FUJITA: Yeah. And you see the shares moving in a big way on those reports from the "Wall Street Journal". But let's start by talking about what exactly Didi is saying. Because we did get a statement from the company this morning saying, reports saying that Didi is considering going private are untrue and at this stage Didi is cooperating with Chinese regulators on cyber security reviews in China.

Now this is in response to that "Wall Street Journal" story saying Didi is considering taking a company private in a move, number one, to placate Chinese authorities. And then also to compensate investors for losses they incurred in the month since the company listed in the US. Specifically, "The Journal" says the ride hailing giant has been in discussions with bankers, regulators and key investors about how to resolve issues that have emerged since their IPO.

And going private is just one option that is being considered. And one, according to "The Journal", that has received support from Chinese regulators. Now, Didi raised of course $4.4 billion in its IPO last month, with shares topping $18 apiece in the first few days of trading. But it has been on a downward slide since, as Chinese regulators look to block Didi's from New users.

And then you had Chinese regulators also looking to tighten rules around foreign listings of Chinese companies. Now "The Journal" reports that any private deal or any take private deal would be funded by money Didi raised in the US listing. The price it would offer to investors hasn't been determined yet. But that they do report it's likely to be around $14 apiece, which is where it IPO'd at. It would, of course, still need approval from Didi's board and major investors.

But again, we are seeing shares move on the back of that. It is up nearly 12% in the session. Now on the issue of major investors, here's some interesting news from one of Didi's biggest investors, Softbank. "The Financial Times" reporting that the company is looking to sell 45 million shares of Uber to make up for heavy losses its incurred in its investments in Didi, as well as other Chinese companies.

The Vision Fund reportedly losing as much as $4 billion following the collapse of Didi shares. Of course, it's worth noting that Softbank is a big investor in Uber. They've got a roughly 15% stake there. So a lot of pieces here moving on the back of what has transpired with Didi. But this report specifically, as it relates to Softbank coming out of "The Financial Times" this morning.

JULIE HYMAN: Yeah. You have to wonder what the legal potential ramifications here in the US are going to be of all of this, particularly if Didi does end up going private. Akiko, Thanks for keeping us posted on all of this.