Uber’s $2.7 Billion Postmates Order 📩
Postmates is a courier service — you pay them to pick up your shopping for you so that you can stay at home. Uber, well, you know Uber, the world’s biggest ride-hailing app, among other things.
Uber has agreed to acquire Postmates for $2.7 billion (plus a tip, plus a service fee!). It’s an all-stock deal that’s expected to close in the first quarter of next year, pending regulatory approval*.
The deal is great for Postmates. The firm was tipped for an initial public offering this year, but insiders agitated about new rivals invading its market. The business was running out of puff, and money, but worth more to Uber alive, than dead. It will help Uber Eats expand. This is all about consolidation, and adding around 8% to Uber Eats’ market share.
This merger will put Uber Eats and DoorDash neck and neck in a two-horse race to dominate food delivery, both with around 45% market share. It’s a duopoly in the making. The regulators will raise an eyebrow, and consumers wail in despair (potentially predatory service fees on the way), but demand won’t abate for these types of services.
There was even a rumored merger between Uber Eats and DoorDash last year. This would have been impossible to get through antitrust; food delivery would have become a total monopoly, and Masa Son of Softbank, who funds both of these companies, said “no.”
The question now is whether regulators say “no” to this domination game in the making. If they do, Uber stock is coming back down 10%, and Postmates is probably going public sooner rather than later. It would be a third wheel in the industry, and a potential short candidate unless DoorDash moves in for it. Be ready!
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
Originally published by Chris Morrissey at https://invstr.com on July 7, 2020.