Uber in Talks to Buy Postmates for Around $2.6 Billion -- Update
30 June 2020 - 2:20PM
Dow Jones News
By Cara Lombardo
Uber Technologies Inc. is in discussions to buy Postmates Inc.
for about $2.6 billion, according to people familiar with the
matter, the latest in a rapid-fire series of moves to consolidate
the food-delivery industry.
Should a deal come together, it could be announced next week if
not sooner, one of the people said. But there is no guarantee it
will.
Postmates, which has held discussions with other possible buyers
since at least last year, has been simultaneously planning an
initial public offering. Just Monday, people familiar with the
matter said the closely held meal-delivery startup was preparing in
the coming days to make its IPO filing public, which could presage
a trading debut later this summer.
A combination would augment Uber's food-delivery arm, Uber Eats,
which already has an international footprint and the second-largest
market share in the U.S. after DoorDash Inc., according to research
from Edison Trends.
Postmates, founded in 2011 and based in San Francisco, is the
smallest among the major U.S. players. The company has raised
roughly $906 million and was valued at around $2.4 billion in 2019,
according to PitchBook. It had confidentially filed for an IPO in
February of last year, but the plan was delayed when the IPO market
became less hospitable to unprofitable startups such as Postmates
in the wake of WeWork's aborted IPO.
The New York Times earlier reported on the discussions between
Uber and Postmates.
There has been a beehive of deal activity lately among
food-delivery companies, which are seeking to better position
themselves amid cutthroat competition and as the coronavirus
pandemic boosts demand. By combining forces and cutting costs, the
companies could jump-start their path to profitability, something
investors are increasingly eager to see.
Grubhub Inc. agreed this month to be bought by Just Eat
Takeaway.com NV for more than $7 billion, besting a bid from Uber,
which had been in talks to combine with Grubhub for months.
DoorDash just raised $400 million in a funding round that valued it
around $16 billion and comes as the privately held company lays the
groundwork for its own IPO.
Even with millions of Americans stuck at home and ordering more
meals in, food-delivery companies are losing money on orders or
barely breaking even. Increased costs to fund promotions and safety
equipment on one hand, and pressure to reduce commissions for
strapped restaurants on the other, have created an even more
challenging financial proposition for the companies.
Uber Chief Executive Dara Khosrowshahi has previously said the
company would exit food-delivery markets in which it wasn't a
dominant player. But the meal business has taken on new weight and
significance as the company's core ride-hailing operation suffers
amid pandemic-triggered lockdowns.
Write to Cara Lombardo at cara.lombardo@wsj.com
(END) Dow Jones Newswires
June 30, 2020 00:05 ET (04:05 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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