Uber wants to put the $11.3 billion it has in cash to good use
The big picture: The food delivery wars are raging on, and Uber is reportedly interested in absorbing Postmates for an exorbitant sum of money despite the financial troubles that led to it laying off thousands of employees. This would be yet another attempt to expand its revenue-making opportunities, but it still has to look good to antitrust regulators before it gets the green light.
Uber has reportedly made a tempting takeover offer to Postmates, one of the US’s largest delivery services. According to a report from the New York Times that was later confirmed by the Wall Street Journal, the deal could see an official announcement early this week.
The ride-hailing giant would supposedly pay around $2.6 billion to absorb the delivery service, which could serve to consolidate its waning food service, Uber Eats. It should be noted that the new deal is valued a lot lower than the failed attempted bid for Grubhub, which ended up in the hands of Amsterdam-based Just Eat Takeaway for an estimated $7.3 billion earlier this month.
Founded in 2011, Postmates was among the pioneers of the US app-based meal delivery business. The competition pushed the company to the fourth place (10 percent market share) below the likes of DoorDash, Uber Eats, and Grubhub — and ever since it has been trying for an initial public offering, which has yet to materialize. The only notable achievement in the last year or so has been to secure a private investment of $225 million that raised the company valuation to $2.4 billion.
Uber Eats accounted for 20 percent of the US food delivery market in 2019. It has seen a boost thanks to the coronavirus pandemic, giving Uber a bit of a financial buffer at a time when its ride-hailing business has seen a dramatic decrease in ridership. The company recently ended up laying off 6,700 employees or approximately one-quarter of its global workforce to stay afloat.