The $2.65 billion deal will expand Uber’s delivery business as its core ride-sharing service sees “massive headwinds” due to COVID-19.
Uber said Monday it had agreed to buy Postmates for $2.65 billion, making a major move to expand its ride-sharing business amid declining demand for ride-sharing.
The announcement of the deal comes a month after Uber failed in its bid to buy rival GrubHub, which was instead sold to European delivery giant Just Eat Takeaway for $7.3 billion.
The combination of Uber Eats and Postmates would create the second-largest U.S. food delivery company with a 37% share of sales. DoorDash would remain the largest player with 45% while Grubhub would have 17%.
Postmates, which was founded in 2011, is the smallest of the Big Four in the market but it operates in thousands of cities across the U.S. and has a strong presence in big markets including Los Angeles, Las Vegas, San Diego and Phoenix.
“We’ve always admired Postmates, I guess, begrudgingly from afar in that it was a competitor who was able to compete aggressively and to be a leader in some very important markets with a much smaller capital base than a lot of its competition, including ourselves,” Uber CEO Dara Khosrowshahi said on a conference call Monday to discuss the deal.
Source: CFO (2020)