Amid the COVID-19 pandemic, food delivery services have become more important than ever. Using a platform like Uber Eats was about convenience just a few months ago. Now, these services are fulfilling a vital need for consumers who don’t want to risk going out in public for their meals.
One of the biggest players in the delivery world, Uber, is reportedly interested in acquiring its rival Postmates. According to The New York Times, a deal could arrive at any minute.
Eating Up Its Rivals
Uber is in dire straits as a result of COVID-19. Demand for the ride-hailing side of its business has plummeted. Not only are consumers traveling less, they’re also taking less-public forms of transportation when they do.
That being said, the rideshare giant is looking for ways to diversify its business and increase its income. Uber Eats has had its own share of troubles in the past, but it is a much more promising segment right now.
As for Uber’s acquisition hopes, it’s no secret that the company wants to gobble up its rivals. Recently, it tried to acquire another competitor, GrubHub, but lost the deal to the U.K.’s Just Eat. Now, it is ready to try again.
Uber has its sights set on Postmates for obvious reasons. Absorbing the delivery startup into its ecosystem would help Uber expand its food delivery offerings and offset some of the losses it is incurring from its ridesharing business.
Meanwhile, Uber and Postmates are rivals in a larger fight. The duo filed a joint lawsuit that aims to thwart California’s gig worker AB5 law.
For Postmates, the deal also makes a lot of sense. The smaller delivery startup has struggled against larger rivals like Uber Eats, Doordash, and Grubhub. Although being absorbed into another company isn’t ideal, it is certainly better than falling into obscurity.
If recent reports are true, the two companies could be nearing a deal as soon as Monday night. Of course, there’s also plenty of time for things to fall through.
When GrubHub was acquired earlier this year by Just Eat, the deal was worth a whopping $7.3 billion. Any agreement that Uber reaches with Postmates promises to be much smaller. For one, Postmates is still a private company. At the time of its last valuation, the delivery startup was worth $2.4 billion.
At this time, it remains unclear how much Uber is offering for the acquisition.
Regardless of how much it costs, the deal could provide a life-saving boost to Uber in its darkest hour. Uber Eats stands to benefit from the addition and the influx of revenue would be incredibly welcome.
Considering that the COVID-19 pandemic is likely far from over, it doesn’t appear that takeout orders will start slowing down anytime soon. That means delivery services like Uber Eats should continue to be very profitable in the months ahead.
For both Uber and Postmates, an imminent deal would be a very good thing. With any luck, it will happen sooner than later without any legal hindrances.