Uber acquires trucking company for R33 billion

Uber will acquire Transplace, a logistics company owned by TPG Capital, for $2.25 billion in the company’s biggest bet on the trucking business.

The deal is designed to help Uber’s freight arm break even more quickly, the San Francisco-based company said in a statement. Uber Freight will turn its first adjusted earnings before interest, taxes and other expenses by the end of next year, the parent company said. The unit generated $995 million in revenue last year.

TPG will receive as much as $750 million in Uber stock and the rest in cash. The transaction is expected to close later this year or in the first half of 2022, according to a company presentation outlining the deal. Uber shares rose slightly on Thursday morning.

Uber’s relationship with TPG dates back to at least 2013, when the private-equity firm made an early investment in the ride-hailing company. Uber moved into trucking after acquiring Otto, a startup developing technology for self-driving trucks. That transaction, which took place in 2016, landed Uber in a contentious battle with Alphabet Inc.’s Waymo over allegations that the technology was based on stolen trade secrets.

Last year, Uber offloaded the autonomous driving business but kept freight. Uber Freight pairs trucking companies with those seeking to transport loads. Uber said this month that it’s expanding to smaller freight loads. Thursday’s deal is an indication of the importance of this often-overlooked part of Uber’s business.

Transplace was formed in 2000 with contributions from some of the largest trucking companies. TPG Capital acquired the company in 2017. Uber said Transplace will help it attract more customers, especially in Mexico. Transplace posted a profit of $77 million last year and is expected to generate more than $100 million in 2021.

The sale exceeds earlier expectations for Transplace. Bloomberg reported in February that TPG was considering a sale of Transplace for about $1.8 billion.

“This is probably an attempt to diversify its revenue base since demand for ride-sharing may remain subdued during the pandemic. With top-line growth likely to taper in its Delivery segment amid a pull-forward last year and tougher comparisons, we believe the deal is mostly aimed at bolstering inorganic growth as there’s no revenue synergies across segments”, said Bloomberg Intelligence technology analyst Mandeep Singh.

Now read: New R200,000 electric car coming to South Africa

Latest news

Partner Content

Show comments


Share this article
Uber acquires trucking company for R33 billion