The Financial Times is reporting that food delivery companies Uber and DoorDash met to talk about a potential merger about six months ago, at the request of SoftBank, which is a shareholder in both companies.
If the merger had been completed, it would have sped up what many analysts say is necessary for the food delivery industry — that large companies consolidate to become profitable.
The talks didn’t end up going anywhere, but both companies say they’ve not ruled out the possibility of returning to the negotiation table, or merging with a different company.
“We’re in constant dialogue with all our shareholders, but to be clear: our M&A strategy is ours and ours alone,” an Uber spokesperson said.
DoorDash had a valuation of $12.6 billion in its funding round in May, and it is the current market leader in the industry, with 37 percent of December sales over Uber’s 21 percent.
SoftBank was reportedly worried about Uber’s viability in the market and pushed the idea of the merger.
The talks between the two companies happened after Uber’s $8.1 billion initial public offering (IPO), but before the WeWork IPO that was eventually withdrawn. SoftBank was Uber’s biggest investor when it went public, with a share of 15 percent of the company.
The industry is crowded and talk of consolidation is continuous, with rivals like Grubhub, Postmates and DoorDash all vying for advantageous positions.
Many services offer deep discounts that are funded by wealthy private investors. Uber lost $316 million in Eats in Q3 of 2019, which is a 67 percent increase from a year before.
In the U.K., Takeaway.com and Just Eat are trying to close a £6 billion merger, which has come under the eye of competition regulators in the country.