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”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
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”.
-
Wage growth in UK jumps ahead of inflationLatest job market data from the ONS shows that wages grew faster than inflation from September to November, but also reveal a worrying rise in unemployment rates
-
Transformed companies displaying momentum and top-quality growthAlex Savvides, manager of Jupiter UK Dynamic Equity Fund, highlights three companies as he tells us where he'd put his money
-
What’s the outlook for the shipping industry in 2025?All we know for certain about the year ahead is that it will be volatile. But the container shipping sector thrives on choppy waters
-
Is the US economy set for success?Ignore the pessimists: US stocks will keep charging ahead, says Max King
-
What investors can expect from stocks and the economy in 2025There are reasons for investors to be hopeful about 2025, with slowing interest rates and moderating oil prices. But trouble may be brewing in bond markets
-
Why Wise could be worth a lot more than its share price impliesForeign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
-
Can The Gym Group pump up your portfolio?Gym Group was one of the best UK small-cap stocks in 2024 and will beef up your profits this New Year
-
MoneyWeek's five predictions for investors in 2025MoneyWeek's City columnist gazes into his crystal ball and sees five unexpected events in store for investors in 2025
-
How buy-and-build stocks deliver strong returnsBunzl, DCC and Diploma became successful through buy-and-build – rolling up dozens of unglamorous businesses. How does it work and what makes it successful?
-
Singapore Technologies Engineering shows strong growthSingapore Technologies Engineering offers diversification, improving profitability and income
