Uber Technologies, Inc has agreed to buy the food delivery service start-up “Postmates” (founded in 2011) for US $2.65 billion, said people familiar with the all-stock deal.
The deal has been approved by Uber’s board and expected to be formally announced as soon as Monday, Bloomberg reported that Pierre-Dimitri Gore-Coty, head of Uber’s food delivery segment, Uber Eats, is expected to continue to run the combined delivery business.
Uber is looking for growth as more people stay home during the pandemic and its main ride sharing business has struggled while Uber Eats Segment has been growing during the corona virus pandemic, its revenue rose 53%. In May 2020, Uber posted a US $2.9 billion loss for the first three months of the year and announced it was laying off 14 percent of its work force.
Last week, Reuters reported that Postmates had revived plans for an initial public offering following dealmaking in the U.S. online food delivery service sector that sparked acquisition interest in the company.
San Francisco-based Postmates accounted for 8% of the U.S. meal delivery market in May, according to analytics firm Second Measure. Postmates was last valued at US $2.4 billion, when it raised $225 million in a private fundraising round last September.
Uber had plans to also acquire Grubhub Inc through its Uber Eats business, but walked away from the deal as Just Eat Takeaway.com NV eventually reached a US $7.3 billion agreement last month to buy the U.S. online food delivery company.
Together, Postmates and Uber Eats would have a 37% share of food delivery sales in the U.S., according to Edison Trends, which tracks credit card spending. DoorDash would remain the largest player with 45%, while GrubHub would have 17%.