Uber settled to buy Postmates for $2.65 billion in stock

A few days before, Uber failed in an effort to buy Gruhub, an online food delivery company. But now, the ride-hailing firm won a different business deal to boost its food delivery department. On Monday, Uber said that it settled on an agreement to acquire Postmates, a food and grocery delivery firm for $2.65 billion in an all-stock deal. It called the startup highly complementary to Uber Eats, the meal delivery service of Uber.

On Monday, Dara Khosrowshahi, the CEO of Uber stated that Uber and Postmates long shared a belief that platforms like them have the ability to power much more than only food delivery – they may a massively important part of local communities and commerce, all the much important during the current crisis such as coronavirus.

At present, the deal subjected to regulatory approvals and expected to finalize in the 2021 first quarter. Uber said that it devoted to offering bridge financing to Postmates as it waits for governmental approvals. Uber shares were up to five percent in early trading on Monday following the news. Postmates considered a pioneer in the on-demand delivery business but stood among the smaller competitors in the United States market.

Ten million active customers of Postmates

According to analytics firm Second Measure, the startup earned eight percent of meal delivery sales in the United States in May. DoorDash, which bought Caviar, a premium restaurant delivery service in August 2019, considered as the United States leader in terms of sales, with a forty-four percent share.

Postmates perform its operations in thousands of cities all over the U.S. with a strong presence in big cities such as San Diego, Phoenix, Las Vegas, and Los Angeles. It also made partnerships with a number of trendy brands such as Sugarfish with ten million active customers.

While discussing the deal, Khosrowshahi said on a conference call on Monday that they always admired Postmates, and according to his assumption, begrudgingly from afar in that, a competitor able to compete violently and to be a leader in some big markets with a much minor capital base than a lot of its competition, including themselves.

Uber Eats, a bright spot for the ride-hailing company

Postmates have been capable of using technology to group together orders efficiently in its famous markets. Uber initially started as just a ride-hailing service, but with time in enhanced its services in other categories like meal deliveries with its, Uber Eats service. However, those efforts possibly took on new urgency as the outbreak at the same time cut demand for its core rides business leading to shooting up demand for meal deliveries.

Uber settled to Acquire Postmates for $2.65 billion
Uber – a ride-hailing service
Source: Web

Uber Eats seen as a bright spot for the ride-hailing firm, especially as people increasingly stay indoors because of the lockdown restrictions due to the coronavirus pandemic. On the company’s 2020 first-quarter earnings call in early May, Khosrowshahi said that at a time when the company’s Rides business fell significantly because of lockdown, the Eats business got a spike. The ride business of Uber down around eighty percent in April.

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