Please ensure Javascript is enabled for purposes of website accessibility
Uber Buys Postmates, UPS Delivery Game in $2.65 Billion Deal
gvw_ap_news
By Associated Press
Published 5 years ago on
July 6, 2020

Share

SILVER SPRING, Md. — Uber has widened its reach in the fiercely competitive delivery market by acquiring Postmates in a $2.65 billion all-stock deal, the company said Monday.
The acquisition enables the ride-hailing giant to increase its delivery offerings at a time when the global pandemic has suppressed customers’ desire for rides while boosting home delivery needs. While Uber’s meal delivery business, Uber Eats, has mostly focused on restaurants, Postmates delivers a wider array of goods including groceries, pharmacy items, alcoholic drinks and party supplies.
“The vision for us is to become an everyday service,” said Dara Khosrowshahi, CEO of Uber, in a conference call with investors 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.”
Uber and its Uber Eats food-delivery division will gain ground against DoorDash, which controls about 37% of the U.S. food delivery market. That’s compared with Uber Eats’ 20% share before the Postmates deal. Grubhub holds around 30% of the U.S. food delivery market, according to Second Measure, a data analysis company.
“We really believe that the market is much bigger than, let’s say, the traditional delivery players,” Khosrowshahi said. “We look at groceries as a category, there’s a lot of hot food being delivered, we look at essentials as a category that we are going to go after as well.”
Last month, Uber lost out in a bid for Grubhub, which would have made it the dominant U.S. food delivery service. But Amsterdam-based Just Eat Takeaway.com ended up nabbing Chicago’s Grubhub in a $7.3 billion deal. Uber was reportedly seeking to team Grubhub with its Uber Eats business.

Uber Has Leaned on Its Food Delivery Business During COVID-19

The food delivery sector is undergoing a major consolidation this year and more is expected. The number of people using food delivery services is on the rise because of the coronavirus pandemic, but customers tend to jump around from service to service depending on where they can find the best deal.
Uber has leaned on its food delivery business with COVID-19 cutting into all ride-share businesses. Uber’s rides business slid 3% in the first quarter and dropped 80% in April compared with the same time last year. Bookings through its food delivery business, on the other hand, surged 54% in the first quarter.
By acquiring Postmates, Uber not only gets the bigger share of the food delivery market it has long desired, but also shores itself up against further pandemic-related losses in its ride-hailing division.
“In our opinion, Uber finds itself with its back against the wall on the consolidation theme as the Grubhub deal fell apart on anti-trust concerns, and now must quickly look to acquire market share and added scale which makes the Postmates deal a smart strategic fit,” analysts with Wedbush Securities wrote Monday.
Postmates, a closely held private company, claims 600,000 food and restaurant merchants to choose from, which it claims is the largest selection in the U.S. The company says it has the ability to serve 80% of households across all 50 states.
The boards of both companies have approved the transaction and the deal is expected to close in the first quarter of 2021.
Uber and Postmates are both based in San Francisco.
Shares of Uber Technologies Inc. were up about 5% Monday morning.

RELATED TOPICS:

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

Yastrzemski and Chapman Homers Help Giants Rally Past the Brewers

DON'T MISS

Fresno City Council Finally Passes a Tough Smoke Shop Ordinance

DON'T MISS

Fresno Unified Trustee Wittrup Says District Had Stronger Candidates Than Misty Her

DON'T MISS

Trump Poised to Offer Saudi Arabia Over $100 Billion Arms Package, Sources Say

DON'T MISS

Lights, Camera, Board Vote: Fresno Unified’s Carefully Choreographed Production

DON'T MISS

US Farm Agency Withdraws Proposal Aimed at Lowering Salmonella Risks in Poultry

DON'T MISS

On Major Economic Decisions, Trump Blinks, and Then Blinks Again

DON'T MISS

Candi Is the Dandy to Add a Little Sweetness to Your Life

DON'T MISS

How Trump Tariffs Could Upend California Farms, Wine Businesses, and Ports

DON'T MISS

Tulare Man Sentenced to State Prison for DUI Crash That Injured Two Women

UP NEXT

Chicago Bears Great Steve McMichael Dies at 67 After Battle With ALS

UP NEXT

Long Wait Is Over for Cam Ward, Travis Hunter and Other Draft Prospects Joining the NFL

UP NEXT

Golden State’s Jimmy Butler Injured in Game 2 Loss, His Status for Game 3 Unknown

UP NEXT

Jalen Green Makes Eight 3s to Help Rockets Even Series With Warriors

UP NEXT

US Justice Department Directs Investigations Over Gender-Affirming Care

UP NEXT

US Justice Department Cancels Hundreds of Grants for Police, Crime Victims

UP NEXT

Yelich’s 5th Career Slam and Bauers’ 2-Run Homer Power the Brewers to Win Over the Giants

UP NEXT

Happ Hits Game-Ending Single in the 10th as the Cubs Rally Past Dodgers

UP NEXT

Trump: No Plans to Fire Fed Chair Powell, but Wants Lower Rates

UP NEXT

Top Producer at ’60 Minutes’ Quits Amid Trump Lawsuit Pressure

Trump Poised to Offer Saudi Arabia Over $100 Billion Arms Package, Sources Say

10 hours ago

Lights, Camera, Board Vote: Fresno Unified’s Carefully Choreographed Production

11 hours ago

US Farm Agency Withdraws Proposal Aimed at Lowering Salmonella Risks in Poultry

11 hours ago

On Major Economic Decisions, Trump Blinks, and Then Blinks Again

11 hours ago

Candi Is the Dandy to Add a Little Sweetness to Your Life

12 hours ago

How Trump Tariffs Could Upend California Farms, Wine Businesses, and Ports

12 hours ago

Tulare Man Sentenced to State Prison for DUI Crash That Injured Two Women

13 hours ago

Judge Partly Blocks Trump Order Seeking to Overhaul US Elections

13 hours ago

Two From Search Group That Uncovered Mexico’s ‘Ranch of Horror’ Killed

14 hours ago

US Warns States They Could Lose Transportation Funding Over Immigration, DEI Policies

14 hours ago

Yastrzemski and Chapman Homers Help Giants Rally Past the Brewers

SAN FRANCISCO — Mike Yastrzemski and Matt Chapman homered as the San Francisco Giants rallied to beat the Milwaukee Brewers 6-5 on Thursday ...

8 hours ago

8 hours ago

Yastrzemski and Chapman Homers Help Giants Rally Past the Brewers

8 hours ago

Fresno City Council Finally Passes a Tough Smoke Shop Ordinance

10 hours ago

Fresno Unified Trustee Wittrup Says District Had Stronger Candidates Than Misty Her

President Donald Trump delivers remarks during an 'Unleashing American Energy' event at the Department of Energy in Washington, U.S., June 29, 2017. (REUTERS File)
10 hours ago

Trump Poised to Offer Saudi Arabia Over $100 Billion Arms Package, Sources Say

11 hours ago

Lights, Camera, Board Vote: Fresno Unified’s Carefully Choreographed Production

Chickens sit at a poultry farm. March 12, 2025. (REUTERS/Diego Vara/File Photo)
11 hours ago

US Farm Agency Withdraws Proposal Aimed at Lowering Salmonella Risks in Poultry

11 hours ago

On Major Economic Decisions, Trump Blinks, and Then Blinks Again

Candi, GV Wire's Adoptable Cat of the Week
12 hours ago

Candi Is the Dandy to Add a Little Sweetness to Your Life

Help continue the work that gets you the news that matters most.

Search

Send this to a friend