Uber To Buy Postmates For $2.6B In Stock

Uber Technologies is buying Postmates Inc., the food-delivery app, in an all-stock deal worth $2.6 billion, Bloomberg reported.

The ridesharing company’s board of directors has approved the acquisition and announced the deal early Monday (July 6).

Vice President of Uber Eats Pierre-Dimitri Gore-Coty will continue to run the combined delivery business, sources told Bloomberg. Postmates CEO Bastian Lehmann will reportedly remain to run Postmates as a separate service.

Second Measure Inc., the San Mateo, California company that collects data on more than 4,500 public and private companies, has revealed Postmates had about 10 percent of food-delivery sales last year, followed by Uber Eats with 20 percent of sales, Grubhub Inc. accounted for 32 percent while DoorDash Inc. led the market with 33 percent, CNBC reported.

The merger is expected to allow the combined companies to go head-to-head with DoorDash, the San Francisco-based on-demand prepared food delivery service founded by four Stanford students in 2013.

Postmates was founded by Lehmann, Sam Street and Sean Plaice in 2011 and says it has grown to include 600,000 merchants nationwide.

Uber and Postmates have yet to turn a profit. Uber lost $2.9 billion in the first quarter because of the COVID-19 crisis.

Food delivery companies, which rely on non-full-time gig workers, are hard to tell apart from a consumer perspective other than pricing, Engadget.com reported.

As a result, mergers and acquisitions are pursued to control costs and pricing which could work against restaurants, users and workers the online news service reported.

“As a part-time courier who works for both [Postmates and Uber Eats] this is bad news,” wrote journalist and gig worker Wilfred Chan on Twitter. “While both are staunch anti-worker companies, fewer and bigger players means even less worker leverage against platform capitalists. With dwindling options, we’ll be exploited even more harshly.”

By joining forces and cutting costs, the companies could make the food delivery service profitable.

Last week, Postmates revived plans for an initial public offering. Postmates has raised more than $900 million to go public.

The deal comes one month after the ridesharing company tried to acquire GrubHub. But the Netherlands-based Just Eat Takeaway made the deal for $7.3 billion.

Representatives for Uber and Postmates declined to comment.