Uber to buy Postmates for $2.65 Billion
By Mike Isaac and Erin Griffith
Uber has agreed to acquire the food delivery startup Postmates for $2.65 billion, said two people with knowledge of the deal, as the ride-hailing firm aims to grow its presence in on-demand food delivery while its core business struggles.
The companies plan to announce the all-stock deal as soon as Monday, said the two people, who spoke on condition of anonymity because the talks were confidential. Uber is expected to combine Postmates with its own food delivery subsidiary, Uber Eats, which has been growing during the coronavirus pandemic.
A spokesman for Uber declined to comment Sunday night, and a spokeswoman for Postmates did not immediately respond to a request for comment. Bloomberg earlier reported the specifics of the deal.
Food delivery apps, which connect drivers, restaurants and customers, have grown quickly in recent years, fueled by venture capital and armies of contract workers. But the services they offer are not very different from one another, leading to heavy competition and pressure to keep fees low. While more people have been using delivery services during the pandemic, profits have been elusive.
As a result, delivery app companies have circled one another, aiming to make deals to gain scale. Postmates previously discussed possible deals with DoorDash, the largest service in the United States, and another rival, GrubHub, according to two people with knowledge of the talks.
In recent months, Uber also discussed buying GrubHub. But last month, GrubHub was instead sold to Just Eats, a European delivery company, for $7.3 billion.
Together, Postmates and Uber Eats would have a 37% share of food delivery sales in the United States, according to Edison Trends, which tracks credit card spending. DoorDash would remain the largest player with 45%, while GrubHub would have 17%.
Uber is looking for growth as more people stay home during the pandemic and its core ride-hailing business has struggled. In May, Uber posted a $2.9 billion loss for the first three months of the year and announced it was laying off 14% of its workforce. But revenue for its Uber Eats division rose 53%.
Postmates, last valued by investors at $2.4 billion, is smaller than the other players. Founded in 2011, it was among the first startups to use part-time “gig workers” to deliver customers whatever they wanted at the tap of a smartphone button.
Postmates has raised more than $900 million in funding, according to PitchBook, from investors including Spark Capital and Tiger Global Management. It had filed to go public.