Uber Sells Stake in Freight Unit to Private Investors
02 Oktober 2020 - 12:29PM
Dow Jones News
By Jennifer Smith
Uber Technologies Inc. is selling a stake in its Uber Freight
truck brokerage arm for $500 million to investors in a funding
round led by Greenbriar Equity Group LP, pumping fresh cash into a
business that has been growing rapidly while also losing money at a
fast clip.
The planned investment comes as the coronavirus pandemic has
hammered Uber's core ride-hailing business, prompting the company
to slash jobs and re-evaluate cash-burning businesses such as
Freight, which accounts for a small portion of Uber's overall
revenue.
The new investors are coming in through what Uber Freight says
is a Series A preferred stock financing. The investment values the
business at $3.3 billion after the funding round.
Two managing partners at Greenbriar, a Rye, N.Y.-based midmarket
private-equity firm focused on logistics and transportation, will
join Uber Freight's board of directors as part of the deal, which
Uber said was expected to close this month.
Uber declined to name the other investors.
The transaction would provide Uber with an infusion of capital
as the company pushes to cut costs and complete a $2.65 billion
all-stock deal to acquire food-delivery rival Postmates Inc. that
is expected to close next year.
It would give Uber Freight the benefit of Greenbriar's logistics
expertise as it scales up its digital freight operation, which uses
technology to match truckers with shippers who need to move
cargo.
"This significant statement of commitment is clearly saying
we're here for the long run," Lior Ron, head of Uber Freight, said
in an interview. "This is the next chapter for us."
Uber Freight has grown rapidly in recent years, rolling out new
logistics services as it gains market share from traditional
freight brokers and from digital rivals including Convoy and
Transfix. Its customers include large shippers like Anheuser-Busch
InBev SA and Nestlé SA.
But profit has remained elusive, and Uber Freight remains a
relatively small player compared with the biggest operators, such
as C.H. Robinson Worldwide Inc., the largest broker in North
America.
Uber Freight generated $211 million in revenue in the second
quarter, up 27% from the previous year and accounting for about
9.4% of Uber's total revenue for the quarter. The logistics arm
reported an adjusted net loss of $49 million compared with a $52
million loss in the same period in 2019.
Uber recently pulled out of the freight brokerage business in
Europe, where the venture was relatively new and more
capital-intensive. In September, Berlin-based sennder said it
acquired that business in an all-stock transaction, with Uber to
take a minority stake in the digital freight forwarder.
Uber decided to retain control of its more mature North American
business, which performed better this year than the company had
modeled, according to a person familiar with the matter.
Mr. Ron said Uber Freight has never been "on the docket" for
sale.
The freight business is benefiting from high demand for truck
transportation, Mr. Ron said. What he called Uber's "adjustments
across the board" during the pandemic, including reductions to the
operating team in the U.S., "allowed us to just be more efficient
going forward," he said.
Uber Freight's technology and Greenbriar's expertise in the
sector "make for an ideal partnership to accelerate Uber Freight's
already significant pace of growth," Greenbriar managing partner
Michael Weiss said in a statement. "We see the increasing rate of
digital penetration in logistics as one of the key trends reshaping
industrial and consumer supply chains."
Preetika Rana contributed to this article.
Write to Jennifer Smith at jennifer.smith@wsj.com
(END) Dow Jones Newswires
October 02, 2020 06:14 ET (10:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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