Postmates, smallest among the major players in the exploding food delivery space, is considering either an IPO or an acquisition by Uber to augment the latter’s own Uber Eats delivery services as its core ride hailing suffers during the pandemic, according to several media reports.
Postmates has also received a second offer from a special purpose acquisition company (SPAC), according to CNBC.
An acquisition by Uber would value Postmates at about $2.6 billion, according to the Wall Street Journal. Investors reportedly prefer the payout from an IPO route.
Analysts have been talking for some time about the need for consolidation within food delivery as players have proliferated, causing market fragmentation, and profits have proven elusive.
Uber is also eager for a deal after its months-long pursuit of GrubHub fell short, when the latter agreed earlier in June to be acquired by Netherlands-based Just Eat Takeaway.com NV in a deal that valued GrubHub at $7.3 billion.
Neil Stern, a senior partner with consultancy McMillanDoolittle, said he believes consolidation in food delivery will continue rapidly, and Uber needs to make a big move.
“Scale is going to become critical as food and beverage operators need to both limit their partners and strive for more efficiencies,” Stern said. “Uber missed out on GrubHub and risks not being relevant unless they can pull off something major.”
Postmates is the fourth largest food delivery service in the U.S., behind DoorDash, GrubHub and Uber Eats, according to CNBC, but has seen success in select urban markets including Los Angeles and Miami. Uber Eats trails them all and is looking to gain ground.