Uber gobbles up US food-delivery platform Postmates

Shares in minicab firm Uber jumped by 4% after it acquired food-delivery platform Postmates for $2.65bn.

Shares in Uber jumped by 4% after it acquired food-delivery platform Postmates for $2.65bn, says Bloomberg. The deal, designed to bolster Uber’s food arm Uber Eats, is the culmination of four years of discussion. It follows Uber’s failed bid to acquire GrubHub, which was instead “scooped up” by Just Eat Takeaway.com for $7.3bn. Postmates was “one of the first to let customers in the US order meal delivery using a mobile app”.

The deal, which will keep the Postmates app running separately for now, suggests that Uber, “under pressure” as its core ride-hailing business reels from global lockdowns, is “trying to expand its reach in the food-delivery business”, says Michael Cogley in The Daily Telegraph. In particular, Uber Eats is keen to dislodge DoorDash from its spot as the food-delivery market leader in the US.

While Postmates’ 8% share of the overall US market is much smaller than Uber Eats’ 22%, it has important “strongholds” in the southwest of the US and in the city of Los Angeles. The deal won’t change the “woeful” economics of food delivery, especially since both companies are currently losing money, says Jennifer Saba on Breakingviews. What’s more, even though Postmates has a relatively small share of the market, regulators will certainly want to “take a close look at the deal’s effect on competition”. 

Still, there are benefits, including an estimated $200m in cost savings achieved by “slashing overhead, sales and marketing”. The merger will also give an indication as to “how regulators will respond to the $55bn ride-hailing firm’s future acquisitions”. 

Recommended

Kieran Heinemann: the history of shareholder capitalism
Investment strategy

Kieran Heinemann: the history of shareholder capitalism

Merryn talks to Kieran Heinemann, author of Playing the Market: Retail Investment and Speculation in Twentieth-Century Britain, about the history of t…
17 Sep 2021
Cryptocurrency roundup: litecoin blunder, cardano update and bitcoin mining in Laos
Bitcoin & crypto

Cryptocurrency roundup: litecoin blunder, cardano update and bitcoin mining in Laos

Saloni Sardana looks at the week’s biggest stories in the world of cryptocurrencies.
17 Sep 2021
Why it pays to face up to your investment mistakes
Investment strategy

Why it pays to face up to your investment mistakes

Buying stocks can be a complicated business. But selling stocks can be tricky, too – even if you sell for the right reasons. Max King explains how to …
17 Sep 2021
With the right political will, inflation can be defeated
Inflation

With the right political will, inflation can be defeated

Governments and central banks can easily control inflation, says Merryn Somerset Webb – they just need the will.
17 Sep 2021

Most Popular

The times may be changing, but don’t change how you invest
Small cap stocks

The times may be changing, but don’t change how you invest

We are living in strange times. But the basics of investing remain the same: buy fairly-priced stocks that can provide an income. And there are few be…
13 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021