Uber Closes the Acquisition of CornershopBy Rodrigo Brugada | Fri, 06/25/2021 - 20:00
Last week, Uber reached an agreement with the minority shareholders of Cornershop to acquire their interests in an all-stock transaction. As such, Cornershop will be a wholly-owned subsidiary of Uber.
The acquisition process began in 2019 and in 3Q2020 Uber acquired a majority stake of the startup, reports CNBC. In the case of Mexico, however, the deal was only approved by COFECE until December 2020 and closed in January 2021 for a sum of US$459 million. As stated in a regulatory filing of the US Securities and Exchange Commission, Uber is acquiring the remaining approximately 47 percent of Cornershop in exchange for approximately 29 million shares of the company. The transaction is expected to close in July 2021, and no leadership changes are foreseen.
Cornershop is headquartered in Chile and was co-founded in 2015 by Oskar Hjertonsson, Daniel Undurraga and Juan Pablo Cuevas. The company provides service in Canada, the US, Mexico, Costa Rica, Colombia, Peru, Brazil and Chile. Hjertonsson announced the acquisition process on Twitter and stated that working together with Uber has delivered excellent results. An example is the joint launch of Cornershop in Brazil in 2020, a market in which the company became a leading player in no time. He added that "to truly unlock the full potential of this partnership, we need to operate as one company."
Mexican venture capital firm ALLVP was one of the critical stakeholders in Cornershop's early days, investing US$8 million when the company was launching in Mexico and Chile in 2015. ALLVP announced and celebrated the acquisition through a twitter release, mentioning that "This exit, one of the largest VC exits via M&A in Latin America's history (after a partial exit in July '20, will allow ALLVP to return 5x its fund 2 with more than 7x expected after realizing the rest of its investments." LAVCA reported that the exit is valued at around US$3 billion and the coming capital distribution will validate the regional VC model and provide unprecedented returns to Mexican pension funds, development finance institutions and entrepreneurs.
Even though this acquisition signifies great news for VC and the corporate levels, an important aspect that remains to be seen is that workers will not necessarily have a share in the gains. As reported by Silicon Angle, after it acquired Postmates, Uber laid off around 15 percent of employees and offered them reduced compensation packages or asked employees to leave or serve out the end of their contract positions. Also, as reported by The Guardian, workers in the company's mobility side have also complained about stagnation or reduction in pay, despite rising fares. While online grocery retail saw significant growth during 2020 and will probably keep growing in the foreseeable future, its social impacts must be taken into account, and worker's rights must be at the forefront.