Uber has purchased food delivery startup Postmates for $2.65 billion in stock, the companies announced Monday. The deal is expected to close in the first quarter of 2021.
Founded in 2011, Postmates was an early pioneer in the “delivery-as-a-service” space and will continue running separately from Uber. The goal of this transaction is to combine Uber’s sophisticated delivery network with Postmates’ long-standing relationships with large and small businesses alike to provide more choices to consumers, better technology to restaurants and new income opportunities for delivery people.
This deal comes on the heels of Uber announcing a $2.9 billion loss in the first quarter of 2020, with gross bookings revenue for rides down 80 percent from a year before. However, gross bookings revenue for its meal delivery offering was up by more than 50 percent, a trend mainly attributed to the COVID-19 pandemic. Despite these gains, Uber Eats trails behind DoorDash, another food delivery startup out of San Francisco, in market shares by 17 percentage points.
To keep up, Uber had originally eyed a purchase of Chicago’s Grubhub, but the deal was abandoned amid antitrust concerns. Grubhub was then bought by Dutch food delivery service JustEatTakeaway in June for $7.3 billion, creating the world’s largest online food delivery company outside of China.
By acquiring Postmates, Uber says it can expand on its ongoing efforts to move beyond just restaurant delivery, but grocery and essential good delivery as well. Both companies are betting that the increased reliance on these services brought on by the pandemic isn’t going away any time soon.
“As more people and more restaurants have come to use our service, Q2 bookings on Uber Eats are up more than 100 percent year on year,” 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.”
Indeed, other companies that specialize in delivering groceries and essential goods like Instacart and goPuff have seen a massive surge in usage since the beginning of the pandemic, so much so that Postmates and Uber listed them among their competitors in a slidedeck distributed to investors. Postmates co-founder and CEO Bastian Lehmann says joining forces with Uber will improve a space that has become increasingly vital.
“Uber and Postmates have been strong allies working together to advocate and create the best practices across our industry, especially for our couriers,” Lehmann said in a statement. “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.”
