Uber is again trying to acquire a rival for food delivery after it went missing in its last attempt earlier this year. The company said today that it plans to cut Postmates in a deal valued at $ 2.6 billion.
The companies announced the transaction of all the shares this morning. Uber said the companies’ businesses are “highly complementary,” since they have different customer bases in different parts of the country. In its press release, Uber praised Postmates as “one of the first pioneers of” delivery as a service “”, a truly spectacular buzzword for our era.
However, what Uber probably wants is for someone to make a profit. The company lost $ 2.9 billion in the first quarter of this year (period ended March 31), after losing $ 1.1 billion each in the fourth and third quarters and a whopping $ 5 billion in the quarter. previous.
The COVID-19 pandemic crashed half of Uber’s business. Travel demand has decreased by 70 percent in recent months as people stopped going anywhere for several months and understandably wary of sharing a closed space with one or more strangers on the rare occasion that they do. Uber laid off 6,700 workers, about a quarter of its global full-time workforce, in two rounds of job cuts in May.
Food delivery companies, on the other hand, have seen increased demand as all the people who can’t go anywhere to get anything use apps and services to bring them all of those things, including restaurant meals. Bookings at Uber Eats doubled in the second quarter of 2020 compared to 2019, Uber CEO Dara Khosrowshahi said in a written statement.
Trust and antitrust
Uber attempted to acquire its rival GrubHub in May. The companies were able to agree on a transaction price, the sources told Bloomberg, but negotiations stalled on one specific point: the breakdown fee.
Many merger agreements contain language that requires one company to pay a fine to the other if, for some reason, the agreement cannot be finalized. In cases where they are likely to receive a great deal of scrutiny from regulators, the acquired company may request the company to make the purchase to compensate them if the government rejects the deal. That fee is reportedly what GrubHub and Uber were stuck with, and with good reason: The mere rumor that Uber and GrubHub might merge already had state and federal regulators deeply concerned.
Ultimately, GrubHub took a completely different direction, instead of accepting a sale to Amsterdam-based Just Eat Takeaway in June in a $ 7.3 billion all-stock deal.
Uber’s Postmates plan may face an easier path to approval than its GrubHub aspirations, but regulators are likely to keep scrutinizing the deal closely. About 95 percent of the US restaurant food delivery market is controlled by four companies: GrubHub (which includes Seamless), DoorDash, Postmates, and Uber Eats.
