SAN FRANCISO—After its plans to acquire Grubhub fell through, Uber, the ride-hailing, food-delivery company, is reportedly trying to purchase Postmates for about $2.6 billion, reports QSR magazine.
Uber’s proposed acquisition of Grubhub was nixed over concerns about antitrust laws and unfair competition. Grubhub then teamed up with Dutch delivery company Just Eat Takeaway and was purchased for about $7.3 billion.
In May, DoorDash occupied 45% of the delivery market, followed by 23% for Grubhub, 22% for Uber Eats and 8% for Postmates. Although Postmates is the fourth-largest among its competitors in the U.S., it holds the biggest market share in Los Angeles with 35%.
Uber is interested in delivery business consolidation after losing $2.9 billion in the first quarter due primarily to the COVID-19 pandemic. Its ride-share business has suffered, and the company has laid off thousands of fulltime employees as a result. But Uber Eats is booming, generating $4.7 billion in bookings in the first quarter, up 54% year-over-year. In April, bookings grew 89% compared with the prior year, excluding India.
Postmates has several options. According to CNBC, the company is deciding between a merger with Uber or joining a special purpose acquisition company to go public. Postmates filed for an IPO in early 2019, but the plans were postponed.
“The reality is that we will IPO when we believe we find the right time for the business and the right time for the markets,” said Bastian Lehmann, co-founder and CEO of Postmates. “And if you look at the markets right now, I believe they are a little choppy. We are hopeful that we find a good window to get out there.”
The company was valued at $2.4 billion during a $225 million fundraising round in September. Reuters reported that Grubhub’s merger with Just Eat, in addition to recent fundraising, has pushed Postmates to move IPO plans forward. The outlet said the company could make its IPO registration public in July.
But there are still bumps in the road for delivery providers. Many have had a contentious relationship with restaurant operators during the pandemic because of fees that sometimes reach 30 to 40%. As a result, several cities have instituted emergency caps, including San Francisco, Los Angeles, New York, Chicago, Seattle and Washington, D.C.