Square Inc. tried to sell Caviar, its food delivery business, but could not find a buyer that would pay the amount that Square wanted, according to Bloomberg.
The parties consulted and considered as potential buyers of Caviar were Uber Technologies Inc., GrubHub Inc. and Yelp Inc. There were also other buyers who had talks with Square. Apparently, Square was approached about a potential deal, but the party or parties did not want to be identified.
The proposed price by Square was $100 million, an amount that was not accepted. Although Uber did counter, Square refused, considering it to be a lowball offer.
Negotiations between Square and potential buyers lasted from late 2015 to the middle of 2016. According to Business Insider, Caviar does not make a profit, and the extent of the losses are not shown in the company’s financials.
Food delivery startups have not done well. For example, Postmates and DoorDash have found it difficult to raise necessary financing. Postmates was slow to raise a new round of financing, and DoorDash raised only a $600 million valuation. This was the same as its previous round, but the company had initially hoped for a $1 billion valuation.
UberEATS and GrubHub, however, are growing. Uber is investing globally in UberEATS, and GrubHub’s stock price has increased by almost 65 percent so far in 2016. In contrast, Square’s stock is down by around 15 percent in 2016.
Square purchased Caviar in August 2014 for $90 million. Square saw the acquisition as a way to sell other products to restaurants. Although Jack Dorsey, CEO of Square, is fond of Caviar, other Square executives are upset by its continued losses.