A leaderless Uber with its value destroyed will be a natural acquisition target.
Uber's CEO Travis Kalanick resigned on June 20, under pressure from investors and it is unclear who replace him, The New York Times reported. Kalanick's resignation came after a host of scandals and rumors that the company is under investigation by the U.S. Justice Department.
This means that Uber is no longer "the world's most valuable unicorn" but it still has a lot of value. Some of the potentially valuable assets include all the data about riders, the software, artificial intelligence research, the vehicle leasing, financing, the self-driving card technology and vast amounts of expertise. There's also a lot of valuable transportation infrastructure including ridesharing in many of the world's greatest cities and growing delivery services.
All of that will make the unicorn a natural acquisition target, particularly if it loses half or two thirds of its value. Naturally a wide variety of potential buyers; including tech companies, automakers and retail giants will be lining up to get their hands on Uber.
What Companies would Acquire Uber?
Companies that might try to buy Uber or its remains include:
1. Ford (NYSE: F) - The automaker needs to get back in investors' good graces. It also needs to escape the impression of being behind the curve on new technology. A great way to do that and lock in a market for its vehicles will be to buy the remains of Uber. Since Ford has $39.99 billion in cash and short-term investments it certainly has the resources to buy Uber.
2. General Motors (NYSE: GM) - This company is already a major player in the rideshare business; it owns a big piece of Lyft and it bought the remains of the defunct networked-transportation company Sidecar. GM also operates a rental-car and ridesharing service called Maven.
4. Volkswagen (OTC: VLKAY) - VW has a lot of money in the bank ($46.79 billion on March 31, 2017) and it needs new technology. Like a number of automakers it is struggling with falling car sales and declining demand for its products.
5. Toyota (NYSE: TM) - The world's largest automaker has not invested heavily in ridesharing but it had $43.08 billion in the bank on March 31, 2017. Uber drivers would be a natural market for Toyota's hybrids and fuel cell vehicles.
6. Amazon (NASDAQ: AMZN) - The Everything Store is ramping up its grocery and same-day delivery services. A great way to do that would be with UberRUSH and UberEats. Uber Trucking would also fit in well with Amazon's retail network. Since Amazon is spending big money to develop its own transportation solutions, this is a more natural fit than you think.
7. Walmart (NYSE: WMT) - The world's largest retailer is already tapping Uber, Deliv and Lyft for delivery. Walmart is investing heavily in delivery capabilities adding tapping its employees for delivery. It is also trying to convert its stores into a network of neighborhood fulfillment centers that would support delivery drivers. Walmart has been on an acquisition spree lately so it is possible.
8. Didi - China's answer to Uber has been very successful it even drove its American rival out of the People's Republic. Didi is now investing in Lyft, so it might make a play for Uber particularly with the support of the Chinese government or venture capitalists.
9. Alphabet (NASDAQ: GOOG) - The company formerly known as Google has invested heavily in self-driving cars through Waymo and delivery through Google Express. It has also invested in its ridesharing apps. Buying Uber would give Alphabet access to vast store of data for its self-driving car and delivery efforts. Buying Uber would give Alphabet (NASDAQ: GOOGL) control of the technology that Anthony Levandowski allegedly stole from Waymo.
10. Apple (NASDAQ: AAPL) - The tech giant's CEO Tim Cook told Bloomberg Technology that his company is focusing on autonomous vehicles. Uber's data and technology would be a valuable resource in that area. Particularly since Apple lacks practical experience in vehicle manufacturing and transportation. Apple definitely has the resources to buy Uber it reported $67.10 billion in cash and short-term investments on March 31, 2017. Alphabet has a lot of cash to play with it had $94.76 billion in the bank on March 31, 2017.
11. Berkshire Hathaway (NYSE: BRK.B) - Remember one of Warren Buffett's modus operandi is to buy good money-making companies that are going through a rough stretch. If somebody can prove that Uber actually makes money this might be a real possibility. Something to remember is that Buffett is now complaining that he missed the boat on tech giants; such as Amazon and Alphabet, so Uncle Warren might be headed to Silicon Valley.
12. Lyft - Buying Uber would enable to Lyft to greatly expand its operations and get access to its data and technology. Purchasing Uber would also enable Lyft to expand into new areas such as meal delivery, artificial intelligence, self-driving vehicles, robotics and trucking. An interesting possibility would be Lyft, GM and Didi teaming up to feast on Uber's carcass.
My suspicion is that some of these companies are already working on their Uber bids right now. The ridesharing pioneer is simply too valuable a commodity to pass up particularly now that its controversial founder Travis Kalanick has left the building.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.