Recently, the famous ride-hailing service Uber announced that the company would purchase Postmates Inc for $2.65 billion to extend its food delivery market share. As the COVID-19 pandemic has hit the company’s core ride-hailing service so the reason for acquiring Postmates Inc is to expand the business of delivering everyday goods.
Uber Purchases Postmates Inc for $2.65bn to Expand its Delivery Service
The all-stock deal between the two companies, still subject to regulatory approval, would provide Uber Inc an approximately 30% share of the massive US food delivery market. Just one competitor is left in this market which is DoorDash and occupies nearly 45% of the total share.\
Uber Inc told that both companies’ boards have confirmed the deal, for which the ride-hailing giant currently expects to release some 84 million shares of common stock. Uber provided a premium of nearly 10pc on Postmates’ earlier valuation of $2.4bn whose shares were up 5pc at $32.24.
Uber Chief Executive Dara Khosrowshahi briefed analysts the tie-up would enable Uber Eats to separate itself by delivering not only restaurant meals, but everything from groceries to personal care and fashion items.
The company has started an option to send packages with the help of its US ride-hailing drivers amid the pandemic. The company also collaborated with a number of grocery stores in several countries around the world. The purchase allows Uber to expand into Postmates’ existing network in 4,200 US cities. The Uber CEO stated, “The vision for us is to become an everyday service.”