Uber reportedly acquires Postmates for $2.65 billion

The acquisition will make Uber number two in US food delivery.

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This illustration photo taken on June 30, 2020 shows the logo of delivery app Postmates on a smartphone screen in Los Angeles. - Uber is in talks to buy food delivery app Postmates in a multibillion dollar deal, US media reported. (Photo by Chris DELMAS / AFP) (Photo by CHRIS DELMAS/AFP via Getty Images)
CHRIS DELMAS via Getty Images

Uber has acquired online food delivery service Postmates for $2.65 billion in stock, according to the NY Times and Bloomberg. The deal is expected to help Uber better compete against food delivery giant DoorDash and will be a consolation prize after it failed to acquire GrubHub. The deal, first reported late in June, could be particularly valuable to Uber in Los Angeles and the southwest US where Postmates is strong. Neither company has confirmed the reports, but are expected to do so later today.

Uber Eats and Postmates will be led by Uber Eats chief Pierre-Dimitri Gore-Coty, Bloomberg’s sources said. However, Postmates CEO Bastian Lehmann will reportedly remain to run Postmates as a separate service.

Postmates pioneered food delivery in 2011, but is a distant fourth in the US market to DoorDash, GrubHub and Uber’s own Eats services. Together, however, Uber Eats and Postmates will be second in the market after DoorDash, which still holds a large lead.

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Both Uber and Postmates are cash-negative operations, with Uber alone having lost $2.9 billion in Q1 2020 because of the COVID-19 crisis. Food delivery companies, which rely on non-full-time “gig workers,” are hard to tell apart from a consumer perspective other than pricing. As such, bigger fish are swallowing smaller ones in order to control costs and pricing — to the potential detriment of restaurants, users and, particularly, workers.

“As a part-time courier who works for both [Postmates and Uber Eats] this is bad news,” wrote journalist and gig worker Wilfred Chan on Twitter. “While both are staunch anti-worker companies, fewer and bigger players means even less worker leverage against platform capitalists. With dwindling options, we’ll be exploited even more harshly.”

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