Tuesday 30 June 2020 10:55 am

Uber makes offer for US food delivery service Postmates

Uber is said to have made a takeover offer for rival food delivery app Postmates, despite the latter having recently filed to go public.

The deal values Postmates at $2.6bn, the New York Times first reported. Talks are still ongoing, and an agreement could yet fall apart.

The tie-up could provide a leg-up to Uber’s own food delivery arm, which has struggled to break ahead in the US amid strong competition in the sector.

The firm had previously entered into merger talks with Grubhub, which was later bought by Just Eat for $7.3bn.

Read more: Uber Eats orders skyrocket 160 per cent in lockdown

However while the business is not profitable, demand for food delivery has skyrocketed in recent months as people stayed home during the coronavirus crisis.

In the UK, the number of restaurant partners on Uber Eats has almost doubled since March, with orders of some products rising as much as 166 per cent.

Postmates has largely been successful in US cities such as Los Angeles, acting as a courier service for everything from coffee to groceries. It confidentially filed to go public in February.

The Californian startup is said to have also held buyout talks with Grubhub and Doordash in the last year. It was last valued publicly by investors at $2.4bn.

Read more: Uber must classify drivers as employees, California rules

Most of the major companies in the food delivery space rely on gig economy workers to act as couriers for the service, but recent legislation in the US state has brought this under threat.

A decision was taken by Californian regulators earlier this month to start enforcing laws which make companies such as Uber treat its drivers as employees, providing them with benefits such as sick pay.

Uber in December sued to block the new law, known as AB5, arguing that it punished app-based companies and was unconstitutional. Postmates is currently supporting a ballot to overturn the law.

Uber declined to comment.

Postmates did not immediately respond to a request for comment.

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