[Overseas Stocks Spotlight] "Uber Strengthens Delivery Business with Postmates Acquisition"

[Asia Economy Reporter Eunmo Koo] Uber Technologies (UBER.US), which has been strengthening its food delivery division since the outbreak of the novel coronavirus disease (COVID-19), has acquired Postmates, the fourth-largest food delivery company in the United States. This acquisition enables Uber to enhance its fresh food and product delivery services, and analysts suggest that in the long term, cost reductions will be possible due to eased competition.

Earlier, on the 6th (local time), Uber agreed to acquire 100% of Postmates' shares for $2.65 billion. Bo-won Choi, a researcher at Hanwha Investment & Securities, explained in a report on the 11th, “The number of food delivery users in the U.S. has increased by 13.0% over the past two years, and it is expected to grow by 16.9% this year compared to last year. However, cutthroat competition to secure market share continues, and mergers and acquisitions (M&A) and sales among U.S. food delivery companies are ongoing for survival.”

Uber has been strengthening its delivery business division since the spread of COVID-19. As the number of vehicle rides decreased after the outbreak, Uber's ridesharing business revenue in the first quarter increased by only 4% year-over-year. In contrast, during the same period, Uber Eats' business revenue grew by 52.8%, driving overall revenue. Until the first quarter of 2018, Uber Eats accounted for only 11% of the total business division, but by the first quarter of this year, it expanded to 23%, and recently, Uber has been enhancing its delivery services for food and fresh groceries through its own platform.

The U.S. food delivery industry continues to experience fierce competition among major companies, but the demand for delivered food has increased since the COVID-19 outbreak, accelerating industry growth. Researcher Choi analyzed, “Despite having the world's second-largest industry size, the penetration rate is only 27.5%, indicating significant growth potential.”

He also predicted, “Through this Postmates acquisition, Uber can secure about one-third of the U.S. food delivery market share, strengthen its fresh food and product delivery service division, and in the long term, cost reductions will be possible due to eased competition.”

This content was produced with the assistance of AI translation services.