On Thursday, San Francisco based Uber Freight, the ride hailing company’s trucking division said that it is buying Transplace, a shipping software company in a deal where the company is valued at $2.25 billion. Uber’s stock rose slightly on Thursday morning. Transplace is an asset of the TPG group since 2017.
The deal will include up to $750 million in Uber common stock and the rest would be in the form of cash. Uber said that it is planning a bond issue of $1.5 billion, before closing the deal; to fund the transaction’s cash part.
Last year, Uber had slimmed down assets that were losing money including its driving unit and its flying taxi unit. Instead, it was making huge investments in segments that were seeing fast growth such as Uber Eats. It strengthened Uber Eats by acquiring Drizly, an alcohol delivery company and Postmates, a food delivery service.
Uber Freight’s booking yielded $301 million in revenue in Q1 of 2021. This is a 51 percent increase year over year. The company said that it could reach profitability after its deal with Transplace after an adjusted EBITDA basis by the end of next year.
In an interview with CNBC’s TechCheck, Uber Freight chief Lior Ron said that the deal would bring digital transformation to the freight industry, continuing the company’s long-term vision.
Transplace, based in Dallas, produces software that aids in the management of companies supply chains to ship goods. It says that it is one of the largest global software platforms for supply chain management and logistics. Uber freight also offer tools for supply chain management and shipping. This joint partnership will extend the rideshare company’s freight business in the U.S. domestic shipping industry.
Uber Freight contributes a small portion to San Francisco based giant Uber, whose revenues come mainly from its ride hailing and food divisions. However, with this merger, the company could grow not just as a market leader but as a profitable one as Transplace has a few giant customers including Colgate-Palmolive, Del Monte, Eaton and more. The deal has yet to receive regulatory approval.
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