Uber Technologies’ food business has acquired rival Postmates in a $2.65 billion all-stocks deal expected to be announced soon, as told by sources aware of the development. Pierre-Dimitri Gore-Coty, Uber’s head of food delivery is anticipated to run continue Uber’s delivery business.
The development comes post Uber’s unsuccessful attempt of acquiring Glassdoor, one of the biggest food delivery businesses in the US. Publicly traded Glassdoor was taken over by Europe’s Just Eat Takeaway for $7.3 billion. The acquisition will help Uber Eats to compete with DoorDash which is market leader of US food delivery business.
Postmates though does not have as strong presence as DoorDash, it has a considerable hold in Los Angeles and Southwest America both of which could prove valuable to Uber. According to people aware of the matter, Uber and Postmates have been in conversations for almost 4 years now but they only reached a conclusion last week. Uber’s Board of Directors has given a green flag to the deal but still a few things are subject to change.
Founded in 2011, Postmates was a pioneer in the food delivery business through mobile app. The company though couldn’t keep up with the intensifying competition. It raised private capital last year in a deal that valued the business at $2.4 billion.
Postmates and Uber Eats together will have a 37% market share in the food delivery business in the United States according to Edison Trends. DoorDash will remain the largest player with 45% share and Grubhub controls 17% in the market.
The deal will help Uber to cope with the losses its core ride-hailing business is making due to the ongoing pandemic. Food delivery has become one of the prime businesses in last few years and the competition is growing day by day.