Uber acquires Postmates for €2.34B after losing Grubhub deal to Just Eat Takeaway

The ride-hailing app Uber, which also operates as a food delivery company UberEats will acquire Postmates for $ 2.65 billion (approx €2.34 billion) in an all-stock transaction, after all the struggle to buy out Grubhub tanked previously

Plans to close deal in Q1 2021

This acquisition could boost Uber’s delivery business and help compensate the company’s core ride-hailing business, which has plummeted due to the COVID-19 pandemic. Notably, the San-Francisco-based company reported $ 2.9 billion (approx €2.6 billion) loss in the first quarter of 2020. The company is planning to close the deal in Q1 2021. Post the acquisition, Postmates app will continue to run separately but with a more efficient, combined merchant, and delivery network. 

Uber CEO Dara Khosrowshahi, said, “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. 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.” 

Soaring demand for online food delivery

According to Uber, consumers will benefit from expanded choice across a wider range of restaurants and other merchants. For restaurants and merchants, Postmates and Uber Eats will together offer more tools and technology to more easily and cost-effectively connect with a bigger consumer base.

Even though the company is not profitable, the demand has soared since mid-March, with 89% YoY gross bookings growth in April. On the other hand, Uber Eats is shutting down its business in unprofitable markets. 

60,000 restaurants and retailers, 50 states

Founded by Bastian Lehmann, Sam Street, Sean Plaice in 2011, Postmates led the creation of on-demand delivery in the U.S and has grown to be the number one platform in Los Angeles. 

Right now, the platform operates in all 50 states and offers customers access to the most selection of merchants in the US with more than 600,000 restaurants and retailers available for delivery and pickup, many of which are exclusive to Postmates. 

“Over the past eight years we have been focused on a single mission: enable anyone to have anything delivered to them on-demand. 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,” said Postmates Co-Founder and CEO Bastian Lehmann.

Main image credits: rafapress/Shutterstock

The post Uber acquires Postmates for €2.34B after losing Grubhub deal to Just Eat Takeaway appeared first on Silicon Canals .

Startups – Silicon Canals

Uber reportedly agrees to acquire Postmates for $2.65 billion

Uber has reportedly agreed to buy Postmates in an all-stock deal worth $ 2.65 billion. According to Bloomberg, the deal may be announced on Monday morning.

Like other travel- and transportation-related businesses, Uber’s ride-hailing segment has been negatively impacted by the COVID-19 pandemic, due to shelter-in-place orders throughout the United States. On-demand delivery, however, has grown, with people relying on services like Uber Eats to get food without leaving their homes. According to its last earnings report, Uber’s ride-hailing gross bookings dropped, but its food delivery service saw gross sales growth of 54% during its first fiscal quarter.

According to previous reports, Uber made an offer to buy Grubhub, another on-demand delivery service, earlier this year, but after that deal fell through, it approached Postmates. Bloomberg reports that Uber and Postmates have actually talked on and off for about four years, but negotiations became more intense about a week ago.

Grubhub ended up being acquired by Just Eat Takeway in a deal worth $ 7.3 billion after its negotiations with Uber stalled.

With a valuation of $ 2.4 billion, Postmates is a smaller company than Grubhub. The company filed to go public in February 2019, but decided to hold off because of “choppy market” conditions.

If the deal goes through, the main competitors in the American food delivery market would be Uber Eats/Postmates versus Grubhub/Takeaway versus DoorDash.

In other countries, companies like Grab have also begun building out their on-demand delivery services to make up for losses from fewer ride-hailing bookings. For example, Grab responded to stay-at-home orders in Indonesia (its main market) and other Southeast Asian countries by re-deploying ride-hailing drivers to on-demand deliveries for food and essential items.

Startups – TechCrunch

As Uber hunts for a deal, can Postmates leverage an IPO?

It’s been a busy last 24 hours or so for on-demand delivery company Postmates. According to reporting, the company is reviving its IPO plans, possibly selling to Uber, or perhaps looking to go public with the help of a special purpose acquisition vehicle, also known as a SPAC.

For Postmates, a company caught somewhere between DoorDash’s cash-fueled rise and Uber’s ability to lose hundreds of millions on its Uber Eats delivery service every quarter, multiples options are likely welcome.

Postmates first filed to go public in early 2019, but its IPO failed to materialize. The company was also reported to be pursuing a sale in 2019 after it had filed to go public. An M&A exit also failed to appear.


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But 2020 is very different from 2019. With GrubHub’s bidding war behind us, Uber appears hungry for more volume, and the IPO market is surprisingly hot given the global pandemic. Postmates may have a number of viable options in front of it, instead of a continued grind as a private company.

The IPO market

So what to do?

Despite some blips, if Postmates has managed anything like revenue growth acceleration because people have been staying home and ordering more food and other goods, the company’s IPO story could prove attractive. And if so, the firm could perhaps best what a cash-burning company can afford to part with in an M&A transaction by going public.

Let’s check the tape. It’s a commonly known fact that the public markets have favored technology companies this year, especially software companies. For many venture-backed companies, this is great news. For Postmates, it’s a slightly different equation, as its margins won’t match those of software companies, nor will its revenue recur in a similar fashion.

But, there are IPOs from this year that we can point to featuring companies that also do not feature strong margins or recurring revenue that did great. So, there is an IPO path for venture-backed startups and unicorns to go public even if they are not software entities.

Vroom

Startups – TechCrunch