Uber reportedly agrees to acquire Postmates for $2.65 billion

Uber has reportedly agreed to buy Postmates in an all-stock deal worth $2.65 billion. According to Bloomberg, the deal may be announced on Monday morning.

Like other travel- and transportation-related businesses, Uber’s ride-hailing segment has been negatively impacted by the COVID-19 pandemic, due to shelter-in-place orders throughout the United States. On-demand delivery, however, has grown, with people relying on services like Uber Eats to get food without leaving their homes. According to its last earnings report, Uber’s ride-hailing gross bookings dropped, but its food delivery service saw gross sales growth of 54% during its first fiscal quarter.

According to previous reports, Uber made an offer to buy Grubhub, another on-demand delivery service, earlier this year, but after that deal fell through, it approached Postmates. Bloomberg reports that Uber and Postmates have actually talked on and off for about four years, but negotiations became more intense about a week ago.

Grubhub ended up being acquired by Just Eat Takeway in a deal worth $7.3 billion after its negotiations with Uber stalled.

With a valuation of $2.4 billion, Postmates is a smaller company than Grubhub. The company filed to go public in February 2019, but decided to hold off because of “choppy market” conditions.

If the deal goes through, the main competitors in the American food delivery market would be Uber Eats/Postmates versus Grubhub/Takeaway versus DoorDash.

In other countries, companies like Grab have also begun building out their on-demand delivery services to make up for losses from fewer ride-hailing bookings. For example, Grab responded to stay-at-home orders in Indonesia (its main market) and other Southeast Asian countries by re-deploying ride-hailing drivers to on-demand deliveries for food and essential items.