NEW YORK: Uber Technologies Inc on Monday said it would acquire Postmates Inc for $2.65 billion to expand its food delivery market share and significantly increase the business of supplying everyday goods at a time when the coronavirus has pummeled its core ride-hailing service.

The all-stock deal, still subject to regulatory approval, would give Uber a roughly 30 per cent share of the US food delivery market, trailing only rival DoorDash, which commands some 45pc, according to analytics firm Second Measure.

The ride-hailing giant said both companies’ boards have approved the deal, for which Uber currently expects to issue some 84 million shares of common stock. It offered a premium of about 10pc on Postmates’ last valuation of $2.4bn whose shares were up 5pc at $32.24.

Uber Chief Executive Dara Khosrowshahi on Monday told analysts the tie-up would allow Uber Eats to distinguish itself by delivering not only restaurant food, but everything from groceries to personal care and fashion items.

Uber has launched an option to send packages via its US ride-hailing drivers during the pandemic and teamed up with grocery stores in several countries. The acquisition allows it to expand into Postmates’ existing network in 4,200 US cities.

“The vision for us is to become an everyday service,” the Uber CEO said.

Khosrowshahi said he expects the deal to create profitability for the Uber’s Eats unit, as well as some $200m in cost saving synergies in about two years and additional efficiency gains through Uber’s smarter routing technology.

Published in Dawn, July 7th, 2020