Please ensure Javascript is enabled for purposes of website accessibility

Uber Looks to Buy Rival Postmates for $2.6 Billion

By Rich Duprey – Updated Jun 30, 2020 at 10:27AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The food delivery space is undergoing a wave of consolidation.

It looks like Uber Technologies (UBER 0.30%) didn't abandon the mergers and acquisitions market after failing to buy food delivery specialist Grubhub (GRUB). The Wall Street Journal reports Uber is now in talks to acquire Postmates for $2.6 billion in a deal that could be announced next week or even sooner.

Failing a merger, Postmates may go public. It has been planning an IPO after confidentially filing to go public in February.

Man holding up Uber Eats bag

Image source: Uber Eats.

Fewer (but bigger) participants

The food delivery market, which has become crucial to the survival of the restaurant industry during the coronavirus pandemic, is also highly competitive. Uber's attempt to buy Grubhub for $6 billion (Grubhub eventually agreed to be acquired by European rival Just Eat (JTKWY 2.99%) for $7.3 billion) is part of a growing wave of consolidation in the space.

Caviar was acquired by DoorDash last year, while Just Eat Takeaway was formed earlier this year by the combination of the U.K.'s Just Eat and Dutch peer in a $7.8 billion deal. Just Eat had previously rejected a hostile takeover bid from South African tech conglomerate Naspers (NPSNY 1.39%).

Postmates was one of the earliest food delivery apps on the market, but was eclipsed by the entry of others, including DoorDash and Uber, with the latter seeking to create alternative revenue streams apart from its ride-sharing expertise. 

Consolidation may be essential to the sector's own survival as profits in the business have been slim to none. Yet if analysts thought an Uber-Grubhub merger would invite antitrust scrutiny, then Uber acquiring Postmates, which has a larger share of the market, may do so as well.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Uber Technologies, Inc. Stock Quote
Uber Technologies, Inc.
$26.50 (0.30%) $0.08
GrubHub Inc. Stock Quote
GrubHub Inc.
Naspers Stock Quote
$24.80 (1.39%) $0.34
Just Eat N.V. Stock Quote
Just Eat N.V.
$3.10 (2.99%) $0.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.