After Failing To Buy GrubHub, Uber Acquires Postmates

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Uber has reached an agreement with Postmates for the former to purchase the food delivery company according to Business Wire. The deal is supposedly worth something in the region of $2.65 billion as part of an all-stock transaction.

Uber has had to make many changes to its way of working during the pandemic. Firstly Uber pool was suspended to stop people sharing cars. Secondly, the food delivery element of its company did its bit by donating $300k worth of food to care staff. However, this move sees a return to the company trying to expand its pick up and delivery empire.

Uber to link up with Postmates

This move brings Uber's food delivery and pick up services in line with Postmates delivery business in the US. The acquisition is one that makes a lot of sense and Postmates and Uber are highly complementary of each other.

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Each company has very distinctive customer and geographical demographics making the merger a sensible one. Postmates also has strong links with local medium and small-sized restaurants. The local service attracts customers which will in turn complement Uber's more mass-market approach.

The plan is for the two companies to link up and, therefore, work together to offer delivery services. This will include using more tools and technology to cost-effectively connect with a larger customer base.

Users should benefit from a larger choice in terms of retailers and restaurants. Employees should, therefore, also have more opportunities to earn money. This is because orders will come more in batches and thus will be more rationalized. So all around it appears as if everybody wins.

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Postmates app to continue to run separately

Uber intends to keep the Postmates app running as its own separate entity. This would allow for it to be supported by a more efficient, combined merchant and delivery network.

CEO of Uber Dara Khosrowshahi said, “Uber and Postmates have long shared a belief that platforms like ours can power much more than just food delivery". Uber has done very well in Q2 and believes it is the right time to expand its network with this acquisition.

Uber estimates that it will issues 84 million shares of common stock as part of its plan. The acquisition has been fully approved by both boards. It is currently just pending on the approval of Postmates stockholder as well as regulatory approval. This is expected to occur in early 2021.

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This looks to be a sensible move for all parties concerned. It looks as if pretty much everyone will benefit from all ends. Customers should receive a better system, the companies can operate more efficiently. In turn, this should create more order allowing for more employees to make more money.