Uber’s attempted merger with Grubhub might have fallen apart, but Uber CEO Dara Khosrowshahi said in a televised interview that shareholders shouldn’t view Postmates, which the transportation company has decided to buy, as second prize. In fact, Khosrowshahi said that shareholders should view it as “the prize.”
The executive said in CNBC's "Squawk on the Street," “We think it’s an attractive price. The asset is a great asset. We actually think that the Postmates brand is exactly the kind of brand that we want."
Khosrowshahi noted that the company is a millennial brand and that its geographic focus and the types of restaurants they have are “pretty incredible.” He noted that Postmates will allow Uber to have a strong market presence in Los Angeles and Orange County.
“We think the one that worked out is a pretty great one, and one that we’re very excited about,” Khosrowshahi said.
In terms of potential anti-competition concerns, he said, “we don’t think antitrust is going to play a big part here.” He also noted that there will be three “very big players” domestically and that there are also a number of local players.
“We’re quite confident that this is a good deal in an attractive industry that we want to grow in,” Khosrowshahi said.
Word surfaced on Monday (July 6) that Uber is purchasing Postmates for almost $2.7 billion in stock – the newest acquisition along the path to determine who will become the largest the quickest in the food delivery space.
When the deal closes, it will provide Uber Eats with greater scale in the U.S. The company's market share will reportedly jump from its current 29 percent to 37 percent. Such a move puts the combined entity near DoorDash’s 44 percent market share in the U.S.
The pivot to food delivery is a key one for Uber, as its central ride-hailing business is down over 80 percent amid the pandemic, per the firm’s recent Q1 earnings report.