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A Postmates sticker is displayed next to an Uber Eats sticker on a restaurant window in San Francisco, California. Uber Technologies Inc. has completed its purchase of Postmates Inc.
Justin Sullivan / Getty Images
In an effort to bolster its growing delivery business, Uber Technologies Inc. announced on Tuesday that it has completed its $ 2.65 billion acquisition of Postmates Inc.
The Uber Eats and Postmates apps will continue to operate separately, Uber UBER,
said in a filing with the Securities and Exchange Commission, although the two companies have started to integrate US operations.
The companies’ combined delivery business is said to be the second in market share after the country’s leading food delivery app, DoorDash Inc., which is expected to go public. According to Edison Trends, DoorDash in October controlled 50% of the US market, and Uber and Postmates together held 33%, followed by GrubHub Inc. at 16%.
See: The pandemic has more than doubled the activity of food delivery apps. Now what?
With restrictions due to the coronavirus pandemic giving the delivery of food and other goods a big boost, Uber Eats generated revenue of $ 1.45 billion in the third quarter, a 125% increase year over year. Uber estimates that for the quarter ending Dec.31, Postmates would contribute $ 350 million to $ 400 million towards the delivery of gross bookings, according to the filing. The integration of Postmates would also increase the Adjusted EBITDA loss from its delivery business by around $ 7 million to $ 12 million, the company said.
Food delivery apps face pressure from the restaurant industry and municipalities over the commissions they take for deliveries and other issues, including their classification of delivery people as independent contractors. In announcing the deal’s closing, Uber said it would embark on a nationwide ‘listening tour’ “designed to better understand the needs of merchants and to continue to develop products, services and policies that protect their interests.
See: The pandemic turned Postmates’ IPO plans into a bidding war between Uber and Wall Street
Uber announced its all-stock purchase of Postmates in July, defeating two unnamed special-purpose acquisition companies that had made offers for the San Francisco-based company. The deal was approved by the US Department of Justice last month.
Uber shares were up 2.5% on Tuesday, to $ 50.90. They have increased by almost 71% so far this year.
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