Online trucking broker Uber Freight will buy the Texas third party logistics provider (3PL) Transplace in a whopping, $2.25 billion deal that will create a “comprehensive end-to-end shipper-to-carrier solution” with new levels of efficiency and service, Uber Freight said today.
San Francisco-based Uber Freight made the purchase by offering some $750 million in common stock of its parent company, the ride hailing pioneer Uber Technologies Inc., and the remainder in cash to Transplace’s owner, private equity firm TPG Capital.
Uber Freight is also backed by outside financiers, having sold a minority stake in the company last year to private equity firm Greenbriar Equity Group L.P. for $500 million. More recently, Uber Freight expanded its digital freight matching app this month from being a purely truckload player into the less-than-truckload (LTL) sector through a partnership with the 3PL BlueGrace Logistics.
The timing of the acquisition comes as global freight flows are stumbling over clogged ports and historically tight trucking capacity as the nation continues its whiplash economic recovery from a pandemic recession.
Faced with those market conditions, Dallas-based Transplace has also stayed busy in the mergers and acquisitions area, reinventing itself in 2020 by acquiring ScanData Systems Inc., a provider of parcel transportation management solutions (PTMS), and the trucking technology platform Lanehub, saying the moves would extend its technological capabilities to improve fleet utilization and supply chain optimization.
According to Uber Freight, combining forces with Transplace now will create a powerful logistics technology platform with one of the largest and most comprehensive managed transportation and logistics networks in the world.
In a release, Uber Freight said that 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,” the company said.
Following the deal, Uber Freight’s brokerage will continue to operate independently from Transplace’s managed transportation services to ensure the highest-quality service for shippers.
One of the biggest impacts of the acquisition could be that it finally allows Uber Freight to scrub the red ink from its accounting books. The unit has consistently lost money, but now expects to break even by the end of 2022, as the Transplace deal “will enable Uber Freight to serve substantially more customers at all levels of the freight industry and will expand its presence into Mexico and through new capabilities in intermodal and customs brokerage,” the company said.
In its most recent earnings report, Uber Freight lost $31 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the three months ending March 31, having collected $301 million in revenue.
“The acquisition will combine the world’s premier shipper network platform with one of the industry’s most innovative supply platforms, to the benefit of all stakeholders,” Frank McGuigan, CEO of Transplace, said in a release. “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.”
We're thrilled to announce that @UberFreight will acquire Transplace from TPG Capital. This will optimize freight movement across the marketplace, deliver best-in-class shipper services, and unlock carrier opportunities. Read more >> https://t.co/dxEiWXQzeg pic.twitter.com/KdJsKwUya5— transplace (@Transplace) July 22, 2021
Today, we announced that TPG Capital has agreed to sell @Transplace to @UberFreight. Thanks to Frank and the team for a fantastic, 4-year partnership! The transaction comes at a time of accelerated transformation in logistics... Read more here: https://t.co/GXWcxC4sUy pic.twitter.com/jNnRVkR2E0— TPG (@tpg) July 22, 2021