Tech

Uber Freight Unit Buys Logistics Techfirm Transplace for $ 2.25 billion

Uber Technologies Of a corporation

The freight division has acquired Transplace, a technology-focused logistics service provider, for approximately $ 2.25 billion worth of cash and equity transactions.

Uber has agreed to acquire Dallas-based Transplace from TPG Capital, a private equity fund of investment firm TPG. Under the agreement, Uber will pay up to $ 750 million in common stock of Uber Freight’s parent company and the rest in cash to TPG Capital.

Uber said it plans to issue a bond to cover the cash portion of the transaction, which is about $ 1.5 billion, before the transaction is completed.

The acquisition begins with San Francisco-based Uber trying to extend its delivery business beyond the core app-based ride-hailing services. It was hit Because the Covid-19 pandemic overturned travel and consumer behavior.

Earlier this week, the company announced the latest expansion of Uber Eats’ food delivery business, expanding grocery delivery across the United States, in agreement with a supermarket chain.

Albertsons

Cos.

Freight is only part of Uber’s entire business, offering $ 302 million of the company’s total revenue of $ 19.5 billion over the three months to March 31.

The company aims to increase the efficiency of its domestic shipping sector through digital booking, but traditional intermediaries that match cargo loads to available trucks and startups focused on technologies such as Convoy and Transfix Inc. We are facing fierce competition with our lineup.

In a statement, UberFreight head Lior Ron said in a statement that the combination with Transplace “integrated complementary best-in-class technology solutions with superior operability to transform the entire shipper’s supply chain and restore operations. Power is provided and costs are reduced when it matters. ” most. “

Uber last fall Sold $ 500 Million Shares We offered UberFreight to investors in a funding round led by the Greenbriar Equity Group LP and withdrew from freight brokerage in Europe last year.

Greenbriar is a former owner of Transplace Sold the company $ 1 billion to TPG Capital in 2017 after a series of acquisitions by logistics providers to expand its services.

Armstrong & Associates Inc, a research group in the logistics industry based in Milwaukee. Evan Armstrong, president of the company, said the integrated business will make Uber Freight the eighth largest third-party logistics company in the United States with sales of approximately $ 4.4 billion. About sales forecast for 2020.

“This deal is very complementary,” Armstrong said. He said Transplace is strong in transport management, including broad control of the shipper’s transport operations, but weak in UberFreight’s core business of freight brokerage, which routinely purchases shipper’s truck capacity.

With Transplace’s suite of services and client contracts, this combination brings UberFreight closer to making a profit, according to Benjamin Gordon, managing director of investment firm BG Strategic Advisors, which advises on mergers and acquisitions in the logistics sector.

“They have gained market leaders and have the opportunity to earn profits,” he said. “They have the ability to enter the market now with a sustainable business model. Being a low-margin freight broker that is just lowering prices is a great way to gain market share, It’s not enough to be profitable. “

Transplace was founded in 2000 by integrating the third-party logistics businesses of six of the largest trucking companies in the United States to create a single web-based market for trucking freight. The company says it manages about $ 11 billion worth of cargo.

Transplace counts customers, including consumer goods suppliers

Colgate-Palmo Leave Co., Ltd.

According to its website, food provider Del Monte and auto parts supplier Eaton.

Write to Paul Page paul.page@wsj.com

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Uber Freight Unit Buys Logistics Techfirm Transplace for $ 2.25 billion

Source link Uber Freight Unit Buys Logistics Techfirm Transplace for $ 2.25 billion

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