Uber bets on food delivery and buys Postmates for $2.65bln as ride-hailing plummets

July 7, 2020
The deal also shows how Uber's business model has been affected by the coronavirus pandemic

Uber has announced that it has acquired food delivery app Postmates in a $2.65-billion, all-stock deal, confirming speculation last week that the two app services were in negotiation. Uber plans to run the business alongside Uber Eats.

The deal also shows how Uber's business model has been affected by the coronavirus pandemic. According to media reports, CEO Dara Khosrowshahi told analysts in a conference call that demand for rides, Uber's main business, had plunged by 75 percent in the second quarter of this year compared to the same period last year. However, Uber Eats orders doubled during the same three-month period.

'Consumers and restaurants have been shifting towards delivery before COVID-19. But the pandemic has accelerated these trends, rapidly attracting new customers and restaurants,' Khosrowshahi was quoted as saying.

Uber bought Dubai-headquartered Careem for $3.1 billion in 2019. The company, which mainly operates in the Middle East, expects ride-hailing demand to recover to pre-pandemic levels 'sometime' in 2021, according to Reuters.

'It's really anyone's guess. We have planned for a recovery (in ride-hailing) sometime next year but ... the recovery has begun and the recovery has been faster already than our initial projections,' Careem's CEO Mudassir Sheikha told Reuters.

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