-->

Postmates acquired by Uber for $2.65 billion

The fourth largest food delivery service merges with Uber Eats, Uber hoping to return strong after a drop in ride-sharing.

Postmates, one of the largest food delivery services in the U.S., agrees to purchase by Uber Eats, which trails only DoorDash in market share.

Uber intends to keep the Postmates app running separately, “supported by a more efficient, combined merchant and delivery network,” according to CNBC. 

Previous plans for Uber were to buy rival food delivery service GrubHub,

However, both companies could not agree on a break-up fee and the ride-sharing company grew frustrated with what it perceived as stalling tactics, report CNBC. GrubHub instead sold to European food delivery service JustEatTakeaway in early June.

Uber is banking on food delivery to help sustain its business during the coronavirus pandemic, as demand for ride-sharing has plunged.

In the first quarter, Uber said gross bookings revenue for its rides segment was down 80% in April from a year earlier, while gross bookings revenue in eats was up more than 50% during the period. 

Postmates has had success in specific urban areas Los Angeles and Miami but has struggled to compete nationally against DoorDash, GrubHub and Uber Eats. Even with Postmates, Uber will still trail DoorDash in food delivery market share, according to Edison Trends.