Decision Time for Postmates

Food Deliverer Weighs its Options

Food delivery company Postmates is weighing acquisition offers from a special purpose acquisition company and from Uber (UBER).

Postmates is the country’s fourth-largest food delivery company by market share. It has been particularly successful in urban centers like Miami and Los Angeles. Postmates had plans to IPO in February 2019, but it put them on hold due to difficult market conditions and harsh competition. The recent spike in food delivery sector deals encouraged the company to reevaluate.

Uber’s Offer

Uber (UBER) is offering to buy Postmates for about $2.6 billion. In early June, Uber was in talks about buying Postmates’ rival, Grubhub (GRUB), but the deal fell through and Grubhub was sold to Netherlands-based JustEatTakeaway (TKAYY).

Because only four companies dominate the food delivery sector in the US—DoorDash, Uber Eats, Grubhub, and Postmates—any combining of these companies could sound antitrust alarm bells. This was an issue with the Uber-Grubhub deal. Antitrust concerns could resurface if Uber moves forward with acquiring Postmates.

Help From a SPAC

Postmates is also considering going public with the help of a special purpose acquisition company, or a SPAC. A SPAC, also known as a blank-check company, acquires companies for the sole purpose of helping them transition to being publicly traded. The name of the SPAC offering to help Postmates make the leap has not yet been identified.

Demand for food delivery has soared during the pandemic. However, this has not resulted in increased profits for most companies. Competition in the sector is fierce and margins are slim. Investors are curious to see how the food delivery industry will fare this summer, especially given the fact that cases are on the rise in many states. All eyes will be on Postmates as investors wait to see what decision it will make and how that will impact the food delivery landscape.

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