In an effort to expand its presence in the food delivery industry, Uber has purchased Postmates for $2.65 billion. The deal was announced on the morning of July 6. Uber plans to combine Postmates with its own food delivery subsidiary and Postmates will continue to operate under its own name.
According to the New York Times, together Uber Eats and Postmates will have a 37 percent share of food delivery sales in the United States. DoorDash, however, will still remain the largest player with 45 percent, and Grubhub will have 17 percent.
This deal comes at a time when food delivery services have received more attention and demand amid the COVID-19 pandemic. Because the apps offer very similar services, there is heavy competition and pressure to keep fees low. The acquisition of Postmates by Uber relieves both companies of that competition.
Prior to this deal, Uber had considered buying Grubhub, but Grubhub sold to Just Eat Takeaway, a European delivery company, for $7.3 billion. Overall, Uber is looking to find ways to continue to grow as people stay home during the pandemic.
While Uber’s ride-hailing business has struggled significantly, losing $2.9 billion for the first three months of the year, the Uber Eats division rose 53 percent. From April to June, Uber Eats’ bookings more than double from the year prior.
Postmates, last valued by investors at $2.4 billion, is smaller than the other food delivery services. The company was founded in 2011 and has about 10 million customers. It was one of the first start-ups to use part-time gig workers to deliver whatever customers wanted through an app.
Uber’s head of food delivery, Pierre-Dimitri Gore-Coty, will continue to run the global delivery business. The chief executive of Postmates, Bastian Lehmann, will stay on during a regulatory review of the deal. According to Uber, longer-term integration plans are still being worked out. Uber is considering integrating certain Postmates services, like its $9.99-per-month subscription that provides no delivery fees on orders over $12.
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