Uber Eats completed its acquisition of fellow third-party delivery company Postmates on Monday in a $2.65 billion all-stock transaction, solidifying Uber as the second-largest food delivery provider in the U.S.
The two companies came to an agreement in July after Postmates decided not to pursue an IPO and a deal between Uber and Grubhub fell through. It brings together two of the largest delivery companies, consolidating the industry under three major players: Uber Eats, DoorDash and Grubhub. In doing so, the deal drew scrutiny from the Department of Justice, which asked to take a closer look at whether it violated antitrust law but ultimately approved the transaction.
Uber views Postmates as a way to accelerate its path to profitability and bolster its presence in the Western U.S., where the smaller company has a strong foothold.
“We built Postmates to empower local commerce and bring the best of your city to your home, especially in cities like Los Angeles and across the Southwest," said Bastian Lehmann, co-founder and CEO of Postmates, in a statement. “I'm confident that alongside Uber Eats we will create even more opportunities for our customers, continue to drive growth for our merchants, and deliver unique earning opportunities for our Postmates.”
Now Uber and Postmates begin the process of integrating their services. Part of that will be a national “listening tour” with partner merchants next year to learn more about their needs and allow them to give feedback on products and services.
From a customer perspective, Uber Eats and Postmates will remain separate entities with their own apps and marketplaces. But they will gradually combine delivery and merchant networks, meaning restaurants that partner with Uber Eats will also become Postmates partners, and drivers will be able to field deliveries from both apps.
Last month, Uber Eats offered a glimpse at how that combination might work when it said it would waive exclusive agreements between Postmates and about 800 restaurants in 11 markets, opening the door for Uber Eats to add them as partners.
“Uber and Postmates have long been committed to powering delivery services that support local commerce and communities, all the more important during crises like the one we face today,” said Uber CEO Dara Khosrowshahi in a statement.
The completion of the deal caps a year of transformation in the third-party delivery industry that saw all four major providers make headlines. DoorDash on Monday launched its IPO, and Grubhub will soon undergo an acquisition by Amsterdam-based delivery giant Just Eat Takeaway.com.
DoorDash is the U.S. market leader, accounting for 51% of food delivery sales in October, according to consumer analytics firm Second Measure. Uber Eats drew 23% of sales followed by Grubhub (18%) and Postmates (7%).
All have seen revenues soar amid the pandemic as more restaurants and consumers turn to delivery. However, the companies remain on a quest for profitability in the difficult three-sided delivery marketplace, and have faced backlash from restaurants over high fees.