Uber is buying meal delivery service, Postmates, for $2.65 billion in an all-cash deal. The company spent nearly 5% of its worth to buy Postmates. Due to the pandemic, Uber’s ride-hailing business faces huge losses so it is leaning into food delivery to make up for lost revenue.
Postmates was launched in 2011 and is headquartered in San Francisco. The company helped revolutionize the food delivery industry. It had been planning to go public in October but market conditions were suboptimal at the time. Now, the company is officially part of Uber’s network.
Postmates’ app will continue to run separately after the acquisition. However, it’ll be able to tap into a merchant and delivery network combined with Uber Eats. This means the meal service will have more restaurant options for consumers while increasing efficiency for drivers who pick up multiple orders at a time. By purchasing Postmates, Uber can improve its marketshare to 37 percent, from its current position of 29 percent.
Uber Eats orders were up more than 54 percent year over year, due to increased demand for food deliveries. However, Uber Eats is under immense strain, from regulatory organizations and competitors such as Grubhub and DoorDash. Uber’s food delivery business has seen a rise in bookings since mid-March, with 89 percent year-over-year gross bookings growth in April excluding India. Uber recently shuttered its Eats business in eight cities.
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