By Dave Sebastian 

Uber Technologies Inc. said it has agreed to buy Postmates Inc. for about $2.65 billion in stock, the latest in a flurry of consolidation moves in the food-delivery sector.

The combination boosts Uber Eats, the company's food-delivery arm that already has an international footprint and is among the largest in the U.S. DoorDash has the largest share of the U.S. food-delivery market, according to research from Edison Trends.

Uber said it will keep the Postmates app running separately after the deal's closing, expected in the first quarter of 2021. Postmates, founded in 2011 and based in San Francisco, is the smallest among the major U.S. food-delivery companies.

The deal comes after Uber's failed bid to buy Grubhub Inc. as the ride-hailing giant seeks surer footing amid the Covid-19 pandemic, which has crushed its rides business. There were also regulatory concerns that a combination with Uber would create a monopoly in New York City. Grubhub last month agreed to be bought by Dutch food-delivery giant Just Eat Takeaway.com NV for more than $7 billion.

Uber Chief Executive Dara Khosrowshahi on Monday said Uber Eats' second-quarter bookings more than doubled from the prior year. In May, he said Uber Eats was a bright spot, with gross bookings rising 52% in the first quarter to $4.68 billion from the year-ago period. Companies have offered steep discounts to get consumers to try out their food-delivery services.

But Uber's rides business, which accounted for three-quarters of Uber's revenue before the pandemic, plunged 80% in April, and the company has taken cost-cutting measures such as eliminating several thousand jobs. Though Uber said the decline in rides has softened, a new wave of coronavirus infections has recently intensified in the U.S.

Uber said Monday it estimates that it will issue about 84 million shares of common stock for 100% of Postmates' fully diluted equity.

Write to Dave Sebastian at dave.sebastian@wsj.com

 

(END) Dow Jones Newswires

July 06, 2020 08:47 ET (12:47 GMT)

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