Economic News
Uber to Acquire Postmates for $2.65 Billion
After the chance to purchase one popular delivery service fell through for the company, Uber is on to the next. This week the ride-sharing company announced that it intends to acquire Postmates to further grow its own delivery offerings, including Uber Eats. The all-stock transaction is valued at approximately $2.65 billion. Currently the deal is expected to close in the first quarter of 2021.
The agreement to purchase Postmates comes after Uber previously pursued Grubhub for acquisition. At the time, it was reported that the latter company was seeking a deal that would see Uber pay 2.15 of its shares per each Grubhub share. Eventually, however, Grubhub was instead snapped up by European company Just Eat Takeaway in a deal valued at $7.3 billion.
A combined Uber and Postmates could be a formidable force for current industry leader DoorDash. According to CNBC, DoorDash recently had a 35% market share. Meanwhile Uber Eats has been a third-place competitor followed by Postmates in a distant fourth.
Regarding the proposed acquisition, Uber CEO Dara Khosrowshahi said in a statement, “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. As more people and more restaurants have come to use our services, Q2 bookings on Uber Eats are up more than 100 percent year on year.” Khosrowshahi concluded, “We’re thrilled to welcome Postmates to the Uber family as we innovate together to deliver better experiences for consumers, delivery people, and merchants across the country.” Elsewhere Postmates co-founder and CEO Bastian Lehmann said of the deal, “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. Uber and Postmates have been strong allies working together to advocate and create the best practices across our industry, especially for our couriers. Together we can ensure that as our industry continues to grow, it will do so for the benefit of everyone in the communities we serve.”
Notably, when word of a potential Uber takeover of Grubhub was revealed, lawmakers and other observers were critical of such a deal. Therefore we can expect that this deal with Postmates will likely see similar blowback. In turn, the acquisition could face some struggles on the regulatory front. Nevertheless, should the deal cross the finish line, it could have in interesting impacts on the market. For one, it could either simplify the lives of delivery people who currently contract with both companies or it could serve to limit their potential — with the actual result remaining to be seen. Similarly, on the restaurant front, locations that currently offer delivery via either service may have one fewer platform to worry about, although some owners may have preferred one over the other for whatever reason. Given all of this uncertainty, it will be interesting to see what becomes of this potential deal and what might occur in its aftermath.
