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Uber failed to buy Grubhub, but officially snagged Postmates

Uber failed to buy Grubhub, but officially snagged Postmates

It’s official: Uber Eats is joining forces with another restaurant food delivery app.

In a deal announced Monday, Uber agreed to acquire Postmates for $2.65 billion. The acquisition was rumored last week after Uber’s failed bid to buy delivery competitor Grubhub in June.

Postmates is less popular than Uber Eats, with only about 8 percent of the U.S. delivery market. Combined, Postmates and Uber Eats have about 30 percent of the market, compared to Grubhub’s 23 percent. Grubhub was bought by a Dutch company, Just Eat Takeaway, last month. 

Uber avoided antitrust scrutiny after its Grubhub talks fell apart, but could face new questions over its acquisition of Postmates.  Read more…

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Why investors are cheering the Uber-Postmates deal

This morning as the markets rally, shares of Lyft are up 3% while Uber shares are up 6%.

Why is Uber so far ahead of Lyft, its domestic ride-hailing rival that is suffering from the same economic impacts? It appears that investors are heartened that Uber has closed its Postmates acquisition after both firms danced around each other for some time, leading to all sorts of leaks that wound up being not coming true.


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This explains why Uber investors are excited about Uber’s Postmates buy; what about the smaller company is making Uber shares so buoyant? Let’s take a walk through the numbers this morning.

If we reexamine Uber Eats’ recent growth, contrast it to Ubers Rides’ own growth, mix in Eats’ profitability improvements along with Postmates’ own financial results, we can start to see why public investors might be heartened by the deal.

Afterward, we’ll toss in a note about how Postmates may provide Uber some narrative ammunition heading into earnings. This exercise should be fun, and a good break from our recent IPO coverage. Let’s get into the numbers.

Growth, losses

In case you are behind, Uber is buying Postmates for $2.65 billion in an all-cash deal. Uber estimated that it would issue around 84 million shares to pay for the transaction. At its share price as of the time of writing, the deal is worth $2.72 billion at Uber’s newer share price. For reference, that price tag is about 4.8% of Uber’s current-moment market cap.

To understand why Uber would spend nearly 5% of its worth to buy a smaller rival, let’s remind ourselves of the performance of the group that it will plug into, namely Uber Eats.

From Uber’s Q1 2020 financial reporting, the following chart will ground our exploration, showing how Eats has performed in recent quarters:

Via Uber’s financial reporting. Q1 2019 on the left, Q1 2020 on the right.

27 best Guy Fieri tweets of 2020, so far

27 best Guy Fieri tweets of 2020, so far

Logging on in 2020 feels a little like staring straight into the hot blaze of a giant flaming dumpster fire. But not everything online is bad.

It can be tough to scroll through social media these days without succumbing to a deep sense of dread, so we’re once again here to remind you that Guy Fieri’s Twitter account exists and can offer you a little comfort and comic relief when the world feels overwhelming.

Fieri has spent a good chunk of 2020 helping  restaurant workers who were financially impacted by the coronavirus, but he and his Knuckle Sandwich team haven’t stopped cranking out some of the most delightful memes on Twitter. Read more…

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