Uber Freight, a cargo division of carriers and shippers, has signed a deal to acquire Transplace, a leading global logistics technology provider.
Uber (UBER) announced today that it has struck a deal with TPG Capital to acquire its Texas-based company Transplace, which provides the largest portfolio of technology services and solutions in the logistics and transportation industry.
In a press release, Uber wrote: “The acquisition of Transplace by Uber Freight will create one of the leading logistics technology platforms with one of the largest and most comprehensive managed transportation and logistics networks in the world.”
The approximate amount of the deal is a considerable $ 2.25 billion, but about $ 750 million Uber will pay in the form of its own shares, and the remainder of the amount 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 the main passenger transportation (Mobility) and delivery (Delivery) app: $ 280 million versus $ 4.6 billion and $ 2.5 billion. . (respectively) for the 2020 financial year
In addition, the Uber Freight division in 2020 was still unprofitable – losses amounted to $ 10 million, but this is significantly better than losses of $ 115 million in 2019.
Amid the COVID-19 pandemic crisis, Uber has had to close businesses in many low-margin regions and ditch its self-driving unit and air taxi segment.
Following the demand in food delivery, Uber has decided to invest billions in strengthening its Uber Eats segment by acquiring alcohol delivery company Drizly and food delivery service Postmates.
However, given the continued growth of e-commerce and the demand for transportation and logistics services, one can understand the rationale behind Uber’s move. Investing in the development and expansion of Uber Freight in the medium to long term can bring significant benefits.
The Uber Freight app today has over 70,000 carriers on 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 services are currently only available in the US and Canada.
Transplace has 62,000 customers worldwide with its portfolio of technology solutions backed by artificial intelligence, machine learning and data processing technologies.
Transplace solutions help reduce transportation costs, improve service, and automate processes, saving time and labor.
Given the growing demand for retail technology solutions, the Transplace acquisition represents a promising asset for Uber Freight.
Uber said the agreement could help its trucking business achieve profit before tax by the end of 2022. US regulatory approval is required to complete the transaction.