The takeover would help Uber Eats gain ground against privately held DoorDash Inc., the current market leader in the U.S., through Postmates’ strong sales in Los Angeles, Las Vegas, Phoenix, San Diego and Miami.
DoorDash remains the dominant player in New York — where it commands more than half the local market — and San Francisco.
“We’ve always admired Postmates, I guess, begrudgingly from afar in that it was a competitor who was able to compete aggressively and to be a leader in some very important markets with a much smaller capital base than a lot of its competition, including ourselves,†Uber Chief Executive Dara Khosrowshahi said on a conference call Monday to discuss the deal.
Gross bookings for its Eats business were up 52% year over year in the first quarter.
(Bookings on Uber Eats more than doubled in the second quarter, Khosrowshahi said Monday.).
“At a time when our Rides business is down significantly due to shelter-in-place, our Eats business is surging,†Khosrowshahi said on the company’s earnings call in early May.
See also: Uber loses nearly $3 billion in three months, but stock rebounds after hours.
But neither side could agree on a selling price, and the combined operation would have surely faced antitrust scrutiny as the unquestioned market leader.
Postmates, which has flirted with an initial public offering, should greatly help Uber expand delivery into more groceries and other small goods, according to Uber.
Postmates recorded $107 million in revenue from $643 million in gross bookings in the first quarter of this year, according to a presentation during Monday’s acquisition announcement.
“Postmates, which is the clear #4 player behind DoorDash, Uber Eats, and Grubhub, would be both a defensive and offensive acquisition in the food delivery space for Uber at a time with its core ride-sharing business seeing massive headwinds in this COVID-19 pandemic,†Wedbush analyst Dan Ives said in a note Monday.
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