Uber has confirmed that it’s buying on-demand delivery company Postmates in an all-stock deal valued at $ 2.65 billion. The announcement comes after a week of intense speculation which culminated in Bloomberg reporting earlier today that the deal was done, though neither company had responded to the claims until now.
According to Uber, the acquisition will be leveraged for both Uber’s burgeoning food delivery business, Uber Eats, as well as its broader pushing into “delivery-as-a-service” which has seen Uber increasingly deliver all manner of goods including groceries.
Postmates had been a hotly anticipated IPO candidate for 2020 having initially filed its paperwork confidentially with the Securities and Exchange Commission (SEC) last year, but the San Francisco-based company shelved those plans due to a lukewarm response from investors. However, Postmates was reportedly preparing to revive those plans as soon as this week, perhaps giving a greater degree of urgency to Uber’s push to consolidate the fiercely competitive food delivery market.
Founded in 2011, Postmates emerged as one of the main players in the on-demand food delivery sphere, partnering with restaurants and other eateries to give them easy access to a smartphone-based delivery network. Although the platform is perhaps better known for delivering food, in reality it can be used to courier just about any item between a merchant and the buyer. This is pretty much similar to how Uber has evolved too, starting out as the logistics infrastructure for taxi-like transport services, before reappropriating the technology for Uber Eats. A few months back, Uber also unveiled a new service called Uber Connect, which repositions its platform as a courier service — friends and family can use it to transport most goods from A to B.
Although Postmates briefly flirted with international expansion with a Mexico launch back in 2017, the platform is now exclusively available to U.S. consumers, making this acquisition a purely domestic play by Uber. Indeed, Uber has been pushing to consolidate the U.S. food delivery market for some time, having reportedly mulled a merger with Postmates’ rival DoorDash last year — instead, DoorDash confidentially filed for an IPO earlier this year, before going on to raise another $ 400 million while placing a question mark over the timescale for its plans to go public. Uber also pursued food delivery juggernaut Grubhub, which was eventually snapped up by European rival Just Eat in a $ 7.3 billion deal back in June.
Uber is no stranger to strategic acquisitions, having recently closed its $ 3.1 billion acquisition of Middle Eastern ride-hail rival Careem and bought a controlling stake in Latin American grocery delivery startup Cornershop. On the flipside, Uber has also divested a number of its local businesses to more-established rivals in Eastern Europe, China, and Southeast Asia.
Having failed to procure market leader DoorDash and Grubhub, it makes sense that Postmates would be next in line for Uber’s M&A team. According to consumer data analytics firm Second Measure, Postmates had 8% of the U.S. food delivery market in May, behind Uber Eats (22%), GrubHub (23%), and DoorDash (45%). Based on that data, Uber will now be the clear second biggest player in the domestic food delivery market.