Uber and Transplace
Uber (UBER) said today it has inked a deal with TPG Capital to acquire Texas-based Transplace, which provides the logistics and transportation industry's broadest portfolio of technology services and solutions.
The estimated value of the deal is a whopping $2.25 billion, but Uber will pay about $750 million in treasury shares and the remainder in cash.
Investors may be a little surprised by the company's move, given that Uber Freight's trucking platform generates a small share of revenue compared to its core ride-hailing (Mobility) and delivery app: $280 million versus $4.6 billion and $2.5 billion for fiscal 2020.
In addition, the Uber Freight division was still loss-making in 2020, with a loss of $10m, but this is significantly better than the $115m loss in 2019. With the COVID-19 pandemic crisis, Uber has had to close businesses in many low-margin regions and abandon its unmanned driving division and air taxi segment.
Following the demand in food delivery, Uber decided to invest billions to strengthen its Uber Eats segment by acquiring alcohol delivery company Drizly and food delivery service Postmates.
The Uber Freight app now has more than 70,000 carriers in its network and thousands of shippers as customers, from small businesses to Fortune 500 companies including AB Inbev, Nestle, LG, Land O'Lakes and many more. Uber Freight's services are available today only in the US and Canada.
Transplace, with its portfolio of technology solutions backed by artificial intelligence, machine learning and data processing software technologies, has 62,000 customers worldwide.
Transplace's solutions reduce transportation costs, improve service, and automate processes, saving time and labour.
Uber said the agreement could help the trucking division generate pre-tax profits by the end of 2022. The deal requires US regulatory approval to complete.