By Edvard Bruu, Marcus Falck (Stockholm School of Economics), Justin Leung, Harson Lin, Ivan Chung (Hong Kong University of Science and Technology)
Overview of the deal
Acquirer: Uber Technologies Inc
Implied Equity Value: $2.65bn
Total Transaction Size: $2.65bn
Closed date: Estimated 1Q21
Target advisor: JP Morgan Securities LLC
Uber on July 6 announced its acquisition of food delivery service Postmates in a $2.65 billion all-stock deal after its offer to buy Grubhub fell apart amid antitrust scrutiny. Postmates’ app will continue to run separately after the deal but its merchant and delivery network will be merged into Uber’s. This is expected to incur revenue and cost synergies and create the second-largest food delivery service in the US representing 30% of the market share.
The deal, expected to complete by 1Q21, verifies yet again the winner-take-all characteristic of the food delivery industry owing to the similar business model among players and competitive edge of economies of scale, which will be further elaborated throughout this report.
“Uber and Postmates have long shared a belief that platforms like ours can power much more than just food delivery—they can be a hugely important part of local commerce and communities.” Dara Khosrowshahi, Uber CEO
Company Details: Uber Technologies
Uber Technologies, Inc. is a multinational ride-hailing company operating in more than 80 countries worldwide. With 110 million users estimated in 2019, Uber is offering peer-to-peer ridesharing, ride-hailing service, shared electric bikes or scooters, and food delivery service under the name of Uber Eats. Uber Eats currently holds 24% of the US domestic food delivery market.
Founded in: 2009
Headquartered in: San Francisco, California, United States
CEO: Dara Khosrowshah
Number of employees: 26,900
Market Cap: $57.5bn (as of 14/07/2020)
EV: $57bn (as of 14/07/2020)
LTM Revenue: $14.6bn
LTM EBITDA: ($8.2bn)
LTM EV/Revenue: 3.32x
LTM EV/EBITDA: (5.90x)
Company Details: Postmates
Headquartered in San Francisco, Postmates is an American delivery company specialising in handling restaurants-prepared meals and other grocery item