Food Delivery War ON: Uber Buys Postmates for US$2.65 Billion

Uber has officially announced that it is acquiring the food delivery start-up Postmates for approximately US$2.65 Billion in an all-stock transaction deal.

Since the Covid-19 lockdown, people have stopped using the ride-sharing; however, they started ordering the food through demand food delivery service.

In May, Uber posted a $2.9 billion loss in ride-sharing service and announced that it would layoff 14% percent of its workforce. But revenue for its Uber Eats rose nearly 53 percent. 

Uber was actively searching to expand its footprints in the Food delivery business as people stayed home during the pandemic.

 Uber tried to acquired Grubhub but could not succeed. European company Just Eats Takeaway acquired Grubhub in a $7.3 billion deal.

Now Uber acquiring Postmates will put Uber Eats into a strong position in the Food Delivery platform in the U.S.

Here is the Food Deliver Market Share in the U.S. after this acquisition according to Edison Trends
  • DoorDash – 45%
  • Uber Eats + PostMates – 37% 
  • Grubhub – 17%

Postmates will continue to operate under its name and existing App but will be combined with UberEats to create the second-largest delivery player in the U.S.

Postmates will continue to operate under its name and existing App but will be combined with UberEats to create the second-largest delivery player in the U.S.

This merger is very beneficial for consumers because they will have an expanded choice of restaurants and other merchants.

Uber CEO Dara Khosrowshahi said “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,”

Postmates’ last valuation was $2.4 Billion, whereas Uber is valued over $30 Billion.

This merger is a good move by Uber to invest and grow in the food delivery market, a sector that will continue to grow in the coming years.

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