Uber’s CEO, a seasoned dealmaker, pursues his biggest one yet

By Gerrit De Vynck, Olivia Carville and Lizette Chapman
In practically three years on the helm of Uber Technologies Inc., Dara Khosrowshahi has centered totally on slicing prices. Now he’s in search of a return to what outlined his profession earlier than Uber: shopping for issues.

Uber is negotiating a potential acquisition of Grubhub Inc. because the coronavirus pandemic drives a surge in demand for meals supply, individuals acquainted with the negotiations mentioned. If a deal is reached, Grubhub, with a market worth of $5.Three billion, can be the biggest Khosrowshahi has ever executed.

Khosrowshahi, 50, cultivated a status as an efficient dealmaker when he ran Expedia Group Inc. for greater than a decade. He accomplished 41 transactions there with a whole worth of $12.7 billion, based on information compiled by Bloomberg. His tenure on the on-line journey large was outlined by a technique he picked up as a prime lieutenant to IAC/InterActiveCorp’s billionaire chairman, Barry Diller: roll up rivals, combine them and reap the rewards of scale.

The plan for Grubhub follows the identical playbook. The firms anticipate there can be main value financial savings by eliminating jobs seen as duplicative, a individual acquainted with the negotiations mentioned. This type of company effectivity—embraced by traders based mostly in the marketplace’s response to the information this week—sparked a swift rebuke from some officers within the U.S., one of whom described the proposed merger as “pandemic profiteering.” Through a spokesman, Khosrowshahi declined to be interviewed.

In the negotiations, Grubhub had been in search of a ratio of two.15 Uber shares for every one of Grubhub’s, a individual acquainted with the talks mentioned. The firms at the moment are discussing a deal valuing Grubhub inventory at 1.9 Uber shares, the Wall Street Journal reported.

Khosrowshahi first developed an admiration for Diller within the 1990s whereas working as an analyst on the funding financial institution Allen & Co. Diller, a consumer of the agency, had made a hostile bid for Paramount Pictures. “I thought to myself, ‘That’s the guy I want to work for,’” Khosrowshahi advised Bloomberg Businessweek in 2017. He joined within the dot-com growth and labored his means up via Diller’s portfolio of firms, changing into chief govt officer of Expedia in 2005.

Expedia had already bought Hotwire and Hotels.com earlier than Khosrowshahi took over, and he accelerated the technique. “Them rolling up a category is not exactly new,” mentioned Stuart MacDonald, who was Expedia’s chief advertising officer on the time and is now a journey trade guide. “Dara turbocharged it.”

Khosrowshahi tried to stability his acquisitiveness with a thriftiness across the workplace. His desk at Expedia sat in an open-plan workplace on the 18th ground of a skyscraper in Bellevue, Washinton, overlooking Seattle. He selected to not lease the highest ground as a result of he thought it was too costly, mentioned Mark Okerstrom, who sat beside Khosrowshahi for seven years and labored with him on a collection of high-profile offers. “He’s not one of those leaders that presides from an ivory tower,” Okerstrom mentioned.

Khosrowshahi’s 12-year tenure at Expedia was outlined by an escalating battle with Booking Holdings Inc. Each tried to outflank the opposite by shopping for upstart manufacturers, splicing them into their tech ecosystems and squeezing out incremental earnings. Revenue at Expedia grew to $10.1 billion, from $2.1 billion, and the corporate’s share worth rose practically sevenfold whereas Khosrowshahi was in cost.

His time there culminated with two huge offers, one after the opposite. In 2015, Expedia paid $1.6 billion for Orbitz, swallowing the one severe rival moreover Booking to safe a maintain of the U.S. market. The Justice Department investigated the antitrust implications for six months and authorized the deal. Then, months later, Expedia purchased HomeAway for $3.9 billion, serving to mount a protection towards the most recent upstart roiling the trade, Airbnb Inc.

Neither acquisition went easily at first. Revenue took a hit in 2016, due partly to community outages from makes an attempt at merging Orbitz’s programs with Expedia’s and to HomeAway’s runaway spending. “There were a lot of questions at first,” mentioned Okerstrom, who took over as Expedia CEO in 2017 earlier than he was ousted final December after clashing with the board over progress prospects. In hindsight, each offers are seen as largely profitable for serving to Expedia hold the voracious progress of Booking in examine. Despite HomeAway’s prices, it turned a core supply of progress for the corporate.

When Khosrowshahi needs to get severe on the negotiating desk, he has a inform. His hand goes behind his neck, his elbow slides throughout the desk, and he hones in on the topic with a calming timbre. “He leans into the numbers, he leans into the issues, and he leans into you,” mentioned Rob Greyber, who labored with Khosrowshahi at Expedia for about seven years managing the corporate’s often-fraught relationship with airways. “In a deal, when there can be a lot of emotion going on, he can snap out of all that, which is a great asset.”

In 2017, Khosrowshahi was chosen because the unlikely candidate to interchange Uber’s co-founder, Travis Kalanick, as CEO. Uber, simply eight years outdated on the time, was already a international behemoth with a valuation far exceeding that of Expedia. Khosrowshahi’s most important duties have been to heal a company tradition that many staff had described as poisonous and produce operational self-discipline. For the latter, he set to work promoting property and slicing prices.

Uber bought operations in Russia and Southeast Asia for stakes in native ride-hailing firms in 2018. He used the identical method final 12 months to dump Uber’s meals enterprise in India to Zomato, eliminating the most expensive supply marketplace for the corporate. The cuts continued final week with the closure of meals supply in seven international locations and the dismissal of three,700 staff worldwide.

Khosrowshahi has made purchases at Uber, too. In 2018, he acquired Jump, then a tiny startup renting electrical bicycles. “Negotiations were directly with him,” mentioned Vivek Ladsariya, a normal associate at SineWave Ventures, an investor in Jump. Khosrowshahi bought the Jump enterprise final week to Lime as a part of an funding within the scooter-rental startup. In the Middle East, Uber purchased ride-hailing firm Careem for $3.1 billion, a deal that closed this 12 months. Then Uber mentioned final week it was slicing 31% of Careem’s employees.

Profit margins are slim in meals supply. Consolidation might assist Uber scale back prices and switch a revenue. But shopping for a firm the dimensions of Grubhub is a new sort of problem for Khosrowshahi. “He’s not going to rush into anything,” mentioned Woody Marshall, a enterprise capitalist who has recognized Khosrowshahi since they have been youngsters.

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