Uber Technologies Inc. (NYSE: UBER) recently announced the acquisition of logistics service provider Transplace. Diversifying into a new market is a great way to gain new customers.
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Uber Technologies will acquire logistics provider Transplace for $2.25 billion. With the acquisition, the company will be able to expand its presence in the freight market. So far, business such as this one makes up a relatively small part of the taxi company’s overall revenue. Thus, only $302 million of the $19.5 billion in gross orders of the company in the first quarter of 2021 was accounted for by freight traffic.
Transplace’s specialty is electronic reservations for shipping companies and its distribution network includes about 11 billion dollars of freight already. Some analysts predict that Uber will become the eighth largest third-party logistics company in the United States with this acquisition.
Uber Technologies has faced tough challenges in the past decade. The company, which depends primarily on the activities of urban residents, encounters a deep crisis as a result of forced self-isolation. The demand for passengers plummeted, and Uber Technologies had to shift its focus to grocery delivery at least partially to offset the loss of passengers.
Delivering goods is another way to improve diversification. Uber Technologies, which was in desperate need of cash last fall, sold part of its cargo delivery division for $500 million. The company had previously sold its European cargo business completely.
Now Uber Technologies has acquired Transplace, which specializes in building supply chains. It is possible to interpret this as the taxi service’s intention to strengthen the trucking division and make it a more visible part of its business.
Uber Technologies Inc. (UBER) closed its share price at $45.95 on Tuesday, July 27. The company has a market capitalization of $85.96 billion.
