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Uber’s Freight Division to Buy Transplace in $2.25B Deal

·2 min read
Linda Parton / Shutterstock.com
Linda Parton / Shutterstock.com

Uber’s Uber Freight logistics platform, which aims to “reshape global logistics and deliver reliability, flexibility and transparency for shippers and carriers,” announced it has entered into an agreement to acquire Transplace for approximately $2.25 billion in a deal it says will create the “largest and most comprehensive managed transportation and logistics networks in the world.”

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The deal consists of up to $750 million in common stock of Uber Freight’s parent company, Uber, and the remainder in cash, according to a release. Uber is acquiring Dallas-based Transplace from TPG Capital, the private-equity arm of investment firm TPG.

“This is a significant step forward, not just for Uber Freight but for the entire logistics ecosystem,” Lior Ron, head of Uber Freight, said in the release. “This is an opportunity to bring together complementary best-in-class technology solutions and operational excellence from two premier companies to create an industry-first shipper-to-carrier platform that will transform shippers’ entire supply chains, delivering operational resilience and reducing costs at a time when it matters most.”

The acquisition will bring Uber Freight closer to showing a profit, according to Benjamin Gordon, managing director of BG Strategic Advisors, who told The Wall Street Journal that this is due to Transplace’s array of services and contracts with customers.

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“They are getting a market leader and they are getting an opportunity to get to profitability,” Gordon told the WSJ. “They have the ability to go to the market now with a sustainable business model. Being a low-margin freight broker, where you are just knocking down the price, is a great way to gain market share but it’s a poor way to get to profitability.”

According to an Uber statement, the combination of services and technology solutions available via Uber Freight will help reduce friction across the supply chain and enable a new era of logistics management. Shippers will have access to a set of technology solutions across all transportation modes and services, bolstered by support services based on Uber’s “advanced technology and data science expertise,” according to the statement.

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Earlier this week, Uber announced an expansion of its Uber Eats food-delivery business thanks to an agreement with a 1,200-store partnership with Albertsons Companies, parent company of the Albertsons supermarket chain.

“This past year has been one of incredible growth for grocery delivery,” Raj Beri, Uber’s global head of Grocery and New Verticals, said in a statement. “Today nearly three million consumers order groceries and other essentials each month through Uber, and we’re just getting started. By adding thousands of beloved grocers to our selection this year, we are fast-tracking our efforts to help Americans get everything they need from their favorite supermarket, delivered to their doorsteps.”

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This article originally appeared on GOBankingRates.com: Uber’s Freight Division to Buy Transplace in $2.25B Deal