Uber Technologies (UBER) has reached an agreement to purchase the remaining shares of Cornershop that it does not already own. If the deal goes through, Uber will own 100% of the grocery delivery startup and make it its wholly-owned subsidiary. Uber stock fell 3.18% on Monday to close at $48.12.
The remaining stake in Cornershop that Uber wants to buy represents a minority interest of 47%. It acquired the majority stake in the third quarter of 2020 (except in Mexico, which closed in January 2021).
“Cornershop’s financial results are already fully consolidated in the Company’s financial statements given the Company’s existing majority ownership, therefore no change is expected to the Company’s Gross Bookings, Revenue or Adjusted EBITDA as a result of the transaction,” Uber said in an SEC filing.
Uber is purchasing the rest of Cornershop in an all-stock transaction. It will involve Uber issuing 29 million shares of its stock to the minority Cornershop investors, for an estimated value of $1.395 billion based on Uber’s closing price on June 21. The transaction is expected to close in July. (See Uber stock chart on TipRanks).
Morgan Stanley analyst Brian Nowak recently reiterated a Buy rating with a price target of $72 on Uber stock. Nowak’s price target implies 49.63% upside potential. The analyst sees Uber’s business aligned with a sustainable future.
For example, the company is on track to become fully electric in the U.S. and Canada by 2030. Additionally, Nowak believes that the introduction of autonomous cars would expand Uber’s addressable market and boost its earnings opportunities.
Consensus among analysts is a Strong Buy based on 24 Buys and 3 Holds. The average UBER analyst price target of $72.24 implies 50.12% upside potential to current levels.
UBER scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.