Uber confirms acquisition of Postmates in $2.65bn food delivery tie-up
Uber has bought up rival delivery app Postmates in a $2.65bn deal, the companies announced today, ending speculation of a tie-up between the pair.
The all-stock deal represents only a slight increase on Postmate’s last private valuation of $2.4bn in September.
Postmates will be kept as a separate app to Uber Eats, but some parts of the back-end processes will be merged — such as using the same couriers for both apps.
“Uber and Postmates have long shared a belief that platforms like ours can power much more than just food delivery — they can be a hugely important part of local commerce and communities, all the more important during crises like Covid-19,” said Uber chief executive Dara Khosrowshahi.
People familiar with the matter told Bloomberg yesterday that Pierre-Dimitri Gore-Coty, head of Uber Eats, is expected to continue to run the combined delivery business.
San Francisco-based Postmates has become a popular choice in US coastal cities such as Los Angeles, cornering around eight per cent market share across the country.
It had previously held talks with other delivery firms such as Doordash, but later opted to file for an initial public offering earlier this year.
Similarly, Uber had previously entered into merger discussions with rival Grubhub before it was bought by Just Eat for $7.3bn.
Postmates co-founder and chief Bastian Lehmann said: “Over the past eight years we have been focused on a single mission: enable anyone to have anything delivered to them on-demand.
“Joining forces with Uber will continue that mission as we continue to build Postmates while creating an even stronger platform that brings this mission to life for our customers.”
As a combined entity Postmates and Uber Eats would have a 37 per cent share of food delivery sales in the US, according to the New York Times, based on credit card spending data.
Doordash would remain the largest player with 45 per cent, while Grubhub would have 17 per cent.
However while its Uber Eats business is not profitable, demand for food delivery has skyrocketed in recent months as people stayed home during the coronavirus crisis.
In the UK, the number of restaurant partners on Uber Eats has almost doubled since March, with orders of some products rising as much as 166 per cent.
Uber reported a $2.9bn loss globally for the first three months of the year in May, and announced it was laying off 14 per cent of its staff.
However revenue for its Uber Eats division rose 53 per cent. Globally, Khosrowshahi said orders on Uber Eats had risen more than 100 per cent in the second quarter.