Uber picks up Postmates in $2.65B deal

SILVER SPRING, Md. — Uber has widened its reach in the fiercely competitive delivery market by acquiring Postmates in a $2.65 billion all-stock deal, the company said Monday.

The acquisition enables the ride-hailing giant to increase its delivery offerings at a time when the coronavirus pandemic has suppressed customers’ desire for rides while boosting home delivery needs.

While Uber’s meal delivery business, Uber Eats, has mostly focused on restaurants, Postmates delivers a wider array of goods including groceries, pharmacy items, alcoholic drinks and party supplies.

“The vision for us is to become an everyday service,” said Dara Khosrowshahi, CEO of Uber, in a conference call with investors Monday. “Postmates is a great step along that vision.”

Uber and its Uber Eats food delivery division will gain ground against DoorDash, which controls about 37% of the U.S. food delivery market. That’s compared with Uber Eats’ 20% share before the Postmates deal. Grubhub holds around 30% of the U.S. food delivery market, according to Second Measure, a data analysis company.

Last month, Uber lost out in a bid for Grubhub, which would have made it the dominant U.S. food delivery service. But Amsterdam-based Just Eat Takeaway.com ended up nabbing Chicago’s Grubhub in a $7.3 billion deal. Uber was reportedly seeking to team Grubhub with its Uber Eats business.

The food delivery sector is undergoing a major consolidation this year and more is expected. The number of people using food delivery services is on the rise because of the pandemic, but customers tend to jump around from service to service depending on where they can find the best deal.

Uber has leaned on its food delivery business with COVID-19 cutting into all ride-share businesses. Uber’s rides business slid 3% in the first quarter and dropped 80% in April compared with the same time last year. Bookings through its food delivery business, on the other hand, surged 54% in the first quarter.