Uber has purchased the Postmates food delivery service for $ 2.65 billion in shares, the companies announced Monday.
The deal brings together the fourth-largest food delivery service in the US with Uber Eats, which only beats DoorDash in market share, according to Second Measure and Edison Trends. The companies said Uber intends to keep the Postmates app running separately, “backed by a more efficient combined delivery and commercial network.”
Uber was previously competing to buy GrubHub, a rival food delivery service, but the talks were cut short because the companies couldn’t agree on a separation fee and the ride-sharing company was frustrated with what it perceived to be delaying tactics. CNBC previously reported. . Instead, GrubHub was sold to the European food delivery service JustEatTakeaway in early June.
Uber is betting on food delivery to help sustain its business during the coronavirus pandemic, as demand for carpooling has plummeted. In its first-quarter earnings call, Uber said gross booking revenue for its travel segment decreased 80% in April from the prior year, while gross booking revenue increased more than 50% during the period.
Postmates has been successful in specific urban areas of Los Angeles and Miami, but has struggled to compete nationally against DoorDash, GrubHub, and Uber Eats. Even with Postmates, Uber will follow DoorDash in the food delivery market share, according to Edison Trends. That should help with U.S. regulators, who may have rejected a link to the Uber-GrubHub but might be more likely to accept a Uber-Postmates deal.
Recode reportedly filed a confidential IPO in February 2019, but postponed its offer later that year due to deteriorating market conditions and stiff competition.
Postmates had also been considering restarting the IPO process, as well as an offer from a special-purpose acquisition company (SPAC), essentially a shell company that exists solely to go public with another company, CNBC previously reported. The San Francisco-based company was valued at $ 2.4 billion in its last round of fundraising in September, Reuters said.
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