Uber Freight to Acquire Transplace for $2.25B – Transport Topics Online

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Uber Freight to Acquire Transplace for $2.25B – Transport Topics Online

[Stay on top of transportation news: Get TTNews in your inbox.] Uber Freight on July 22 announced a definitive agreement to acquire managed transport

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Uber Freight on July 22 announced a definitive agreement to acquire managed transportation provider Transplace, from TPG Capital, for $2.25 billion. The deal consists of up to $750 million in common stock of Uber Freight’s parent company, Uber Technologies Inc., and the rest in cash.

The transaction is expected to close later this year or in the first half of 2022.

Transplace ranks No. 13 on the Transport Topics list of the Top 50 largest logistics companies. Uber Freight is No. 41.

Lior Ron of Uber Freight (left), Frank McGuigan of Transplace

Ron of Uber Freight (left), McGuigan of Transplace

Lior Ron, head of Uber Freight, said the acquisition would 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.”

Transplace CEO Frank McGuigan said, “Our expectation is that shippers will see greater efficiency and transparency, and carriers will benefit from the scale to drive improved operating ratios. All in all, we expect to significantly reduce shipper and carrier empty miles to the benefit of highway and road infrastructures and the environment.”

Industry consultant Evan Armstrong, president of Armstrong & Associates Inc., said both companies have developed good proprietary — and now complementary — technologies and the acquisition makes sense strategically.

Evan Armstrong

Armstrong

“In terms of the combination, Transplace has very good technology around managing large transportation networks for customers,” Armstrong said. “Uber Freight has good technology geared toward transactional freight brokerage business, which has been somewhat of a gap in the Transplace model.”

Armstrong said the transportation management segment represents 17% of the total gross revenues in the domestic transportation management 3PL segment. The other 83% comes from freight brokerage.
Once the deal is finalized, Uber Freight’s brokerage will continue to operate independently from Frisco, Texas-based Transplace’s managed transportation services, according to the San Francisco-based digital freight broker.

At the same time, the completed transaction is expected to grow Uber Freight’s customer base substantially, the company noted, and will expand its presence into Mexico and through new capabilities in intermodal and customs brokerage.

We are excited to announce that we have agreed to acquire @Transplace! More here: https://t.co/4ZrPnlxwly pic.twitter.com/IYq5v9SLOd

— Uber Freight (@UberFreight) July 22, 2021

“Culture-wise, I think it is going to be a pretty good match,” Armstrong said. “There is a lot of emphasis [in each] around continual improvement and growth.”

In 2020, the domestic transportation management segment that Transplace and Uber Freight participate in had gross revenues of $91.2 billion, Armstrong said. Net revenue was $13.2 billion, “and the net revenues have been growing at 10.5% annually. That’s the compound annual growth rate from 1995 to 2020.”

He estimated the potential market size for that domestic transportation 3PL segment is $457 billion.

We want to thank TPG for their partnership as we have worked together to position Transplace as a leader in supply chain innovation! https://t.co/XsK4n15Jhw

— transplace (@Transplace) July 22, 2021

“So there is a lot of runway for growth for both of these companies combined,” Armstrong said.

Uber Freight expects the transaction will accelerate its path to profitability and help it to break even on an adjusted earnings before interest taxes depreciation and amortization basis by the end of 2022. It reported Transplace — with 3,100 employees across North America and Europe — is profitable and expected to generate $100 million in EBITDA in 2021.

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Fast-growing Uber’s Q1 run rate reached $1.2 billion compared with revenue of $995 million in 2020 and $67 million in 2017, the company noted.

In a release, the companies pointed out the acquisition comes at a time of accelerated transformation in logistics. The demands of a volatile market and the increasing complexity of globalized logistics are clashing with industrial-age transportation technology. In the midst of capacity constraints and escalating transportation costs, shippers are adapting their operations at an increasing pace and looking for technology, support and solutions that can modernize their supply chain and keep critical goods, and the economy, moving.

TPG Capital acquired Transplace in 2017 and terms were not disclosed.

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