The U.S. on-demand food delivery market has seen its second mega-merger in less than a month.
Uber Technologies Inc. has reached a definitive agreement to purchase Postmates Inc. for approximately $2.65 billion in an all-stock transaction. This merger brings together Uber’s global Rides and Eats on-demand delivery platform with Postmates’ U.S. delivery business. According to Uber, Postmates is highly complementary to Uber Eats, with differentiated geographic focus areas and customer demographics.
In addition, Uber sees value in Postmates’ established relationships with small- and medium-sized restaurants, particularly independent businesses. Postmates has also been an early pioneer of “delivery-as-a-service,” which Uber feels complements its growing efforts in the delivery of goods beyond takeout food, such as groceries and essentials.
Following the closing of the transaction, Uber intends to keep the consumer-facing Postmates app running separately, supported by what the company intends to be a more efficient combined merchant and delivery network. Uber currently estimates that it will issue approximately 84 million shares of common stock for 100% of the fully diluted equity of Postmates.
This transaction comes on the heels of the June $7.3 billion mega-deal, which saw Dutch food delivery company Just Eat Takeaway agree to buy Grubhub for $7.3 billion. That deal will create the world’s largest online food delivery company outside of China and provide Just Eat Takeaway a major entry into the U.S. market.
Uber Eats had been engaged in periodic merger negotiations with Grubhub for over a year. However, concerns over possible antitrust issues prevented the two companies from reaching a deal.
According to data from Edison Trends, DoorDash took the lion's share of U.S. on-demand food delivery transactions in April 2020, at 45%. UberEats followed with 28%, and Grubhub had 17%. Postmates took 7%. By adding Postmates’ market share, UberEats will be able to better solidify its second-place position behind DoorDash, which has held the lead in market share of transactions since March 2019.
“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,” said Uber CEO Dara Khosrowshahi. “As more people and more restaurants have come to use our services, Q2 bookings on Uber Eats are up more than 100% 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.”
“Over the past eight years we have been focused on a single mission: enable anyone to have anything delivered to them on-demand,” said Postmates co-founder and CEO Bastian Lehmann. “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.”
The boards of directors of both companies have approved the transaction, and stockholders representing a majority of Postmates’ outstanding shares have committed to support the transaction. The transaction is subject to the approval of Postmates stockholders, regulatory approval and other customary closing conditions and is expected to close in Q1 2021. Wachtell, Lipton, Rosen & Katz served as legal counsel to Uber. J.P. Morgan Securities LLC served as financial advisor and Latham & Watkins LLP as legal counsel to Postmates.