Uber has finalized a deal to purchase Postmates in a $2.65 billion all-stock deal.
The merger comes several weeks after talks between Uber and Grubhub fell through due to antitrust concerns. Grubhub then joined European food delivery company Just Eat Takeaway for $7.3 billion.
The deal is expected to close in Q1 of 2021. The transaction has been approved by both boards, and stockholders representing a majority of Postmates’ outstanding shares support the move.
“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,” said Uber CEO Dara Khosrowshahi in a statement. “As more people and more restaurants have come to use our services, Q2 bookings on Uber Eats are up more than 100 percent year on year. 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 estimates that it will issue approximately 84 million shares of common stock for 100 percent of the fully diluted equity of Postmates.
Acquiring Postmates would make Uber the second-largest third-party delivery company behind DoorDash.
According to Second Measure, DoorDash occupied 45 percent of the delivery market in May, followed by 23 percent for Grubhub, 22 percent for Uber Eats, and 8 percent for Postmates. Although Postmates is fourth-largest among its competitors nationally, it holds the biggest market share in Los Angeles with 35 percent. Meanwhile, Uber Eats holds just 15 percent of the market in L.A.
With the move, Uber is attempting to capitalize on a delivery business that has grown tremendously amid the pandemic while offsetting the plummet of its ride-share sales. The company lost $2.9 billion in Q1 due primarily to the COVID, but Uber Eats is booming. It generated $4.7 billion in bookings in Q1, up 54 percent year-over-year. In April, bookings grew 89 percent compared to the prior year, excluding India.
Bloomberg reported that Pierre-Dimitri Gore-Coty, vice president of Uber Eats, will head the merged company. Postmates CEO Bastian Lehmann and his team will remain in place to manage Postmates as a separate brand.
Postmates is moving forward with Uber despite an offer to join a special purpose acquisition company to go public, according to CNBC. The company confidentially filed for an IPO in early 2019, but the plans were put on hold because of unsafe marketing conditions. Postmates was valued at $2.4 billion during a $225 million fundraising round in September.
“Over the past eight years we have been focused on a single mission: enable anyone to have anything delivered to them on-demand," 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. Uber and Postmates have been strong allies working together to advocate and create the best practices across our industry, especially for our couriers. Together we can ensure that as our industry continues to grow, it will do so for the benefit of everyone in the communities we serve."