Uber could rebound from that Grubhub heartbreak with a $2.6B Postmates marriage
You can't hurry love... No, you just have to wait (until another acquisition target takes the bait). Back in June, Uber had its sights set on a marriage with Grubhub ā until European stud Just Eat swooped in with $7.3B. Now, Uber may be learning to love again with much-smaller food delivery rival Postmates...
- Rebound acquisition: Uber has made an offer to buy Postmates for $2.6B, according to #PFWTM (people familiar with the matter).
- Intimate wedding: In the mafia-style territory split of the food delivery world, Postmates controls just 8% of the US market.
- Limited options: There are only 4 big players in the US food delivery market. Don DoorDash leads (and just hit a $16B valuation), while Uber Eats is #3 with 22%.
Better than going solo... Uber wants consolidation because it needs to reduce the aggressive price competition it faces every day. "Promiscuous customers" have turned delivery into a profit-killing promo code battle. But Uber is not the only suitor courting Postmates' hand...
- An unnamed acquisition company made an undisclosed offer (doesn't sound too sexy).
- Public investors are potential suitors. Postmates has been busy prepping its IPO (which it filed for last Feb).
- Now, Postmates has to decide whether to accept the proposal of a bigger corporate suitor, or go it alone on the public market.
In a commoditized market, merging is the best shot at profits... Customers aren't loyal to food delivery brands, so profit-burning promos have been critical for one app to stand out from another. But Postmates is barely competing, while Uber is struggling to keep up with DoorDash. Combining operations could allow Uber+Postmates to raise delivery fees and cut costs. We're having Sprint + T-Mobile marriage flashbacks.