NEW YORK: Uber Technologies Inc has agreed to buy Postmates Inc for US$2.65bil to expand in food delivery after the coronavirus pandemic cratered demand for ride-hailing, its main business, and an earlier attempt to acquire Grubhub foundered.
The all-stock deal is a modest outcome for Postmates, once a pioneer of the gig economy that was outmanoeuvred by deep-pocketed competitors.
It had been valued at US$2.4bil in an investment last year, a source said at the time.
Uber estimates that it will issue about 84 million shares of common stock for 100% of the fully diluted equity of Postmates, the company said in a statement announcing the deal yesterday. Shares of Uber rose 9% in early trading in New York.
“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, ” Uber said in the statement.
Pierre-Dimitri Gore-Coty, the head of Uber’s food-delivery business, is expected to oversee the combined operation, a source said Sunday.
Under their agreement, Postmates co-founder Bastian Lehmann and his team will stay on to manage the Postmates service, said another source.
In its statement, Uber said it plans to keep the Postmates app running separately, supported by a more efficient, combined merchant and delivery network.
Since the start of the pandemic, Uber has cut more than a quarter of its staff and exited or pared back some businesses, such as electric bikes and financial services, so it could focus on core areas: ride-hailing and food delivery.
Global rides plummeted 70%, chief executive officer Dara Khosrowshahi said in June. Uber Eats has been a bright spot for the company as stay-at-home orders and restaurant closures have prompted more customers to order in.Uber sees advantages of combining with Postmates beyond just meal delivery.
Postmates has also been an early pioneer in delivery-as-a-service, complementing Uber’s efforts in shuttling groceries, essentials and other goods, the company said.
Restaurants and merchants will benefit from tools and technology to connect with a bigger consumer base, according to the statement. — Bloomberg
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