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Autos & Transportation

Uber's trucking unit to buy logistics planner Transplace for $2.25 bln

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A screen displays the company logo for Uber Technologies Inc. on the day of it's IPO at the New York Stock Exchange (NYSE) in New York, U.S., May 10, 2019. REUTERS/Brendan McDermid/File Photo

July 22 (Reuters) - Uber Technologies Inc's (UBER.N) trucking business is buying transportation logistics company Transplace for about $2.25 billion from private equity firm TPG Capital, in a deal that is expected to speed up the unit's path to profitability.

The acquisition, announced by Uber on Thursday, consists of up to $750 million in the company's common stock and the remainder in cash.

Uber Freight operates as a middle man in the fragmented long-haul trucking business, connecting truckers with shippers. Transplace works with shipping brokers and carriers to manage supply chains and plan logistics, including cross-border shipments.

The deal marks a departure from Uber's strategy in recent years of selling capital-intensive businesses, such as its self-driving and flying taxi units, to achieve long-elusive profitability. read more

The company instead has doubled down on its food-delivery service Uber Eats, which has been a pandemic winner, by acquiring rival start-up Postmates and last-mile alcohol delivery company Drizly.

Uber is also expanding its grocery delivery business, announcing this week a partnership with Albertsons Companies Inc (ACI.N) and Costco Wholesale Corp (COST.O).

The Transplace acquisition will put weight behind Uber's trucking unit at a time of accelerated transformation in logistics, the ride-hailing company said in a statement.

"This transaction is expected to accelerate Uber Freight's path to profitability and help the segment to break even on an adjusted EBITDA basis by the end of 2022," Uber said.

Transplace on its website says it counts 62,000 unique users and has $11 billion of freight under management.

Transplace is projected to post EBITDA of more than $100 million this year, Uber said in an investor presentation. It did not disclose Transplace's revenue but said the company reported a compound annual revenue growth rate of 15% since 2017.

Reporting by Tiyashi Datta and Subrat Patnaik in Bengaluru, Tina Bellon in Austin, Texas; Editing by Aditya Soni and Steve Orlofsky

Our Standards: The Thomson Reuters Trust Principles.

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