Uber Agrees To Buy Postmates For $2.65BN In Stock After Losing Battle For GrubHub
Mon, 07/06/2020 – 08:16
After failing to convince GrubHub’s millennial managers that a tie-up would be the best bet for the publicly traded takeaway rival to Uber’s fast-growing Uber Eats, Uber has moved on to ‘Plan B’, and agreed to buy Postmates in a $2.65 billion all-stock deal.
Uber Eats head Pierre-Dimitri Gore-Coty is expected to continue to run Uber’s combined delivery business, according to a person who asked not to be identified discussing a private deal. Under their agreement, Postmates Chief Executive Officer Bastian Lehmann and his team will stay on to manage Postmates as a separate service, another person said.
Uber confirmed the deal on Monday, after the news was broken by Bloomberg. As the coronavirus resurgence drives millions of Americans back indoors, Uber management sees food delivery as a critical market that Uber must dominate (at least in the US) to ever have a hope of finding long-term profitability. Last year, WSJ published a series of stories outlining how app-based third-party food-delivery is a money-losing proposition, and has been propelled, so far, by a surfeit of capital raised from VCs and the public markets. As one executive remarked to WSJ in the series, the problem with food delivery is that a single delivery driver can only deliver 2-3 meals in an hour, tops (and that’s assuming he’s working in a crowded urban environment like NYC).