Uber asserts its dominance on third-party delivery market after acquiring Postmates for $2.65B

-By Ghali Moutawakil, University College London


Uber Technologies

Target: Postmates

Total Transaction Value: $2.65 billion

Close Date: December 1st, 2020

Target Advisor: JPMorgan Securities LLC

Uber announced, on December 1st 2020, the closing of its acquisition of Postmates in a $2.65 billion all-stock deal. This deal, which brings together two of the largest delivery companies, will consolidate the industry under three major players: Uber Eats, DoorDash and Grubhub.

“We built Postmates to empower local commerce and bring the best of your city to your home, especially in cities like Los Angeles and across the Southwest”

-Bastian Lehmann, co-founder and CEO of Postmates

acquiring company : Uber

Uber is an American technology company specialised in ride-hailing, food delivery, package delivery, couriers and freight transportation. The company has operations in over 900 metropolitan areas worldwide and is one of the largest firms in the gig economy.

Founded : 2009

Headquarters : San Francisco, California, U.S.

CEO: Dara Khosrowshahi

Number of Employees: 26,900 (2019)

Market Cap: $74.9 billion (19/09/2021)

EV: $81.25 billion

LTM Revenue: 12.81B

EBITDA: -3.51B

EV/Revenue: 6.34

EV/EBITDA: -23.16


Postmates is a food delivery company operating in the United States. Postmates is the market leader in Los Angeles, holding approximately 35% of the market share, and has a platform that gives customers access to more than 600,000 restaurants and retailers.

Credits: Postmates

Founded : 2011

Headquarters : San Francisco, California, U.S.

CEO: Bastian Lehmann

Number of Employees: 5,341 (2019)

Revenue: $500 million (2019)


As a result of the pandemic, Uber’s ride-hailing activity suffered significant losses. In May 2020, Uber announced a loss of $2.9 billion for the first quarter of the year and decided to lay off 14 percent of its work force. Consequently, Uber chose to capitalise on the growth of its UberEats division. Indeed, revenues for this division rose 53 percent during Q1 2020. In line with this, Uber acquires Postmates in expectation of increasing its profitability and consolidating its presence in the west coast and particularly Los Angeles, where Postmates holds 35 percent of the market share.

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.”

-Daniel Ives, an industry analyst with Wedbush Securities

According to Edison Trends, Postmates and Uber Eats would have, together, a 37 percent share of food delivery sales in the United States. However, DoorDash would remain the largest player with 45 percent, while Grubhub would have 17 percent.

In the long term, Uber and Postmates will exploit their synergies by gradually combining delivery and merchant networks, which means that restaurants partnering with Uber Eats will also become Postmates partners, and drivers will be able to field deliveries from both apps. Most importantly, by increasing its market share, Uber gains a competitive advantage in terms of cost and negotiation power: consumers prefer apps that offer the widest choice of restaurants, and restaurants prefer the apps that attracts the largest number of consumers.


The main concerns are amongst consumers and clients as the U.S. third-party delivery market has contracted from four major companies to three. There are fears that, in the long run, this dynamic could stifle innovation, not enhance it, as the restaurant-delivery market tends toward concentration and oligopoly. The reason behind this trend is that food delivery companies offer very much the same services which lead to a pressure to reduce fees on consumers. Therefore, companies take over each other in the objective of dominating the market and getting rid of competition.

“Not only are they not running a sustainable business, I don’t think it’s their plan to run a sustainable business. Their plan is to get to the top of the mountain, and hopefully only two groups are left so they can hash it out then.”

-Nabeel Alamgir, Lunchbox CEO

%d bloggers like this: