Uber said Monday it will buy delivery service Postmates for about $2.65 billion in an all-stock transaction. The deal comes after Uber failed to strike a deal earlier this year to combine with Grubhub.
The move “brings together Uber’s global Rides and Eats platform with Postmates’ distinctive delivery business in the U.S.,” Uber said. “Postmates is highly complementary to Uber Eats, with differentiated geographic focus areas and customer demographics, and Postmates’ strong relationships with small- and medium-sized restaurants, particularly local favorites that draw customers to the Postmates brand. Additionally, Postmates has been an early pioneer of “delivery-as-a-service,” which complements Uber’s growing efforts in the delivery of groceries, essentials, and other goods.”
The move follows the announcement in June that Chicago-based Grubhub would combine with Amsterdam-based Just Eat Takeaway.com to form what promises to be an international food delivery force. That deal put to rest any anticipation that Uber and Grubhub would join forces in the growing online food delivery game — a potential partnership that was already raising significant antitrust concerns, given that the combined operation reportedly would control 55% of the U.S. food delivery market.
The move also comes as Uber strives to shore up its business during the pandemic, which has caused declines in ride-sharing bookings. In April, for instance, gross bookings for rides were down 80% year over year. By contrast, business for food deliveries increased 50%.
“The vision for us is to become an everyday service,” said Uber CEO Dara Khosrowshahi in a conference call Monday. “Postmates is a great step along that vision. Anyplace you want to go, anything you want delivered to your home, Uber is going to be there with you, and we think these everyday frequent interactions create a habit, create a connection with customers.”
The new deal with Postmates, Uber said, “will together offer more tools and technology to more easily and cost-effectively connect with a bigger consumer base. Uber said that it plans to operate the consumer-facing Postmates app running separately after the deal closes, which is expected in the first quarter of 2021.
“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,” Khosrowshahi said. 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. 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.”
As Uber seeks to close the deal with Postmates, the food delivery space keeps expanding and adding more features. Target, for instance, recently said that it aims to offer deliveries and curbside pickups of fresh and frozen grocery items via some 1,500 stores by the 2020 holiday season. FreshDirect, meanwhile, has launched two-hour, on-demand grocery deliveries for shoppers in Manhattan, Brooklyn and parts of Queens.