Uber Technologies agreed Monday (July 6) to purchase delivery firm Postmates Inc. in an all-stock deal worth $2.65 billion.
“Uber and Postmates have long shared a belief that platforms like ours can power much more than just food delivery, they can be a hugely important part of local commerce and communities, all the more important during crises like COVID-19,” Uber CEO Dara Khosrowshahi said in announcing the deal. “We’re thrilled to welcome Postmates to the Uber family as we innovate together to deliver better experiences for consumers, delivery people, and merchants across the country.”
Uber said it estimates that it will issue 84 million shares of common stock for 100 percent of the fully diluted equity of Postmates, which primarily does Web-based food delivery. Uber added that following the closing, Postmates will continue to run separately, supported by a more efficient, combined merchant and delivery network.
The merger is expected to allow the combined companies to go head-to-head with DoorDash, the San Francisco-based food-delivery service founded by four Stanford students in 2013.
Second Measure Inc., the San Mateo, Calif., company that collects data on more than 4,500 public and private companies, estimates Postmates had about 10 percent of food-delivery sales last year, while Uber Eats had 20 percent of sales. Grubhub Inc. accounted for 32 percent while DoorDash Inc. led the market with 33 percent, CNBC reported.
Postmates was founded by Bastian Lehmann, Sam Street and Sean Plaice in 2011 and says it has grown to include 600,000 merchants nationwide.
“Over the past eight years we have been focused on a single mission: enable anyone to have anything delivered to them on-demand,” CEO Lehmann said in a statement. “Joining forces with Uber will continue that mission as we continue to build Postmates while creating an even stronger platform that brings this mission to life for our customers.”
However, neither Uber and Postmates have turned a profit yet. For example, Uber lost $2.9 billion in the first quarter because of the COVID-19 crisis. But by joining forces and cutting costs, the companies could make the food-delivery service profitable.