SAN FRANCISCO — Uber has agreed to acquire the food delivery start-up Postmates for $2.65 billion as it aims to expand its presence in on-demand food delivery while its core ride-hailing business struggles.
The companies announced the all-stock deal on Monday morning. Uber will combine Postmates with its own food delivery subsidiary, Uber Eats, which has been growing during the coronavirus pandemic. Postmates will continue to operate under its own name.
Food delivery apps, which connect drivers, restaurants and customers, have grown quickly in recent years, fueled by venture capital and armies of contract workers. But the apps offer very similar services, leading to heavy competition and pressure to keep fees low. While more people have been using delivery services during the pandemic, profits have been elusive.
As a result, delivery app companies have circled one another, aiming to make deals to gain scale. Postmates previously discussed possible deals with DoorDash, the largest service in the United States, and another rival, Grubhub, according to two people with knowledge of the talks.
In recent months, Uber also discussed buying Grubhub. But last month, Grubhub was instead sold to Just Eat Takeaway, a European delivery company, for $7.3 billion.
Together, Postmates and Uber Eats would have a 37 percent share of food delivery sales in the United States, according to Edison Trends, which tracks credit card spending. DoorDash would remain the largest player with 45 percent, while Grubhub would have 17 percent.
Uber is looking for growth as people stay home during the pandemic and its ride-hailing business struggles. In May, Uber posted a $2.9 billion loss for the first three months of the year and announced that it was laying off 14 percent of its work force. But revenue for its Uber Eats division rose 53 percent. From April to June, Uber said, bookings through Uber Eats more than doubled compared from a year earlier.
Daniel Ives, an industry analyst with Wedbush Securities, said in a note to clients that the deal was a “defensive and offensive acquisition in the food delivery space for Uber at a time with its core ride-sharing business seeing massive headwinds in this Covid-19 pandemic.”
Postmates, last valued by investors at $2.4 billion, is smaller than the other players, with about 10 million customers. Founded in 2011, it was among the first start-ups to use part-time “gig workers” to deliver customers whatever they wanted at the tap of a smartphone button.
Pierre-Dimitri Gore-Coty, Uber’s head of food delivery, will continue to run the global delivery business, Uber said. Bastian Lehmann, chief executive of Postmates, will stay on during a regulatory review of the deal; longer-term integration plans are still being worked out, according to Uber.
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Updated June 30, 2020
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What are the symptoms of coronavirus?
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
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Is it harder to exercise while wearing a mask?
A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico.
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I’ve heard about a treatment called dexamethasone. Does it work?
The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth.
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What is pandemic paid leave?
The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.
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Does asymptomatic transmission of Covid-19 happen?
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
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What’s the risk of catching coronavirus from a surface?
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
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How does blood type influence coronavirus?
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
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How many people have lost their jobs due to coronavirus in the U.S.?
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
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How can I protect myself while flying?
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
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What should I do if I feel sick?
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
In announcing the deal, the companies shared a few financial details about Postmates. In the first quarter of 2020, Postmates had revenue of $107 million and more than 115,000 merchants who used the platform. Uber said Postmates had performed especially well in the Southwest, including Phoenix, Las Vegas, Los Angeles and San Diego.
Dara Khosrowshahi, Uber’s chief executive, said Uber might integrate certain Postmates services, including its $9.99-per-month subscription that provides no-fee delivery on any orders over $12.
“You can expect to see some of these tactics at Uber Eats,” he said on a conference call with Wall Street analysts. “We think it’s just a wonderful combination.”
Postmates has raised more than $900 million in funding from investors including Spark Capital and Tiger Global Management, according to PitchBook. It had filed to go public.
Mike Isaac and Erin Griffith reported from San Francisco, and Adam Satariano from London.