Uber to acquire food delivery app Postmates for $2.7 billion
Uber, which is deep into its yearslong effort of becoming a profitable company, has bought rival Postmates for $2.65 billion. The move to purchase Postmates, announced Monday, will help Uber's food delivery service become a stronger competitor to industry leader DoorDash.
The food delivery sector is undergoing a major consolidation this year, with Grubhub purchased last month in a $7.3 billion by Amsterdam-based Just Eat Takeaway. More customers are ordering food deliveries because of the coronavirus pandemic, but customers tend to jump from service to service depending on where they can find the best deal.
Uber and Postmates are better as one company as opposed to two entities with similar missions, Postmates CEO Bastian Lehmann said in a statement Monday.
"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," Lehmann said.
By acquiring Postmates, Uber not only gets the bigger share of the food delivery market it has long desired, an estimated 31% of the business, but it also shores itself up against further pandemic-related losses in its ride-sharing division. DoorDash has 44% of the food delivery market, according to Second Measure, a California data firm that analyzes consumer transactions.
Uber lost $2.9 billion in the first quarter as ridership plummeted globally due to the pandemic. But Uber Eats, its food delivery segment, made $148 million during the quarter as more Americans who were sheltering at home ordered out.
The pandemic has pushed Uber even further away from profitability. The company has racked up three straight years of multibillion-dollar operating losses, according to its annual report, including an $8.6 billion loss for 2019. As of January 1, the company had cumulatively lost more than $16 billion.
Uber's stock price rose nearly 6%, to about $32.50, on news of the Postmates deal.
The Associated Press contributed to this report.
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Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.
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