Postmates CEO Bastian Lehmann. Photo credit: Postmates

 The US Justice Department has cleared Uber’s $2.65 billion acquisition of food delivery competitor Postmates after scrutiny, according to a report by Axios, citing a “source familiar with the deal”. Uber’s acquisition of Postmates was announced in July this year after its pursuit to buy another food delivery company, Grubhub, was scrapped.

Uber’s planned acquisition of Grubhub fell apart for reasons including regulatory concerns given a tie-up with Grubhub would have given the company a lion share of the US food delivery market. After the Grubhub deal fell through, Uber moved to acquire Postmates for $2.65 billion in an all-stock deal, scooping up a company with an 8% share of the US food delivery market, according to data from Second Measure.

In September, Uber disclosed in a regulatory filing that the US Justice Department was scrutinizing its proposal to acquire Postmates over antitrust concerns. Now, it seems that the scrutiny has been cleared, with Uber free to complete its deal. 

With Postmates, Uber is getting a food delivery company that brought in $321 million in revenue in 2019 and recorded a net loss of $420 million in the same year. Postmates was looking to go public before Uber moved to acquire the company to strengthen its Uber Eats business which has itself grown rapidly amid the coronavirus pandemic and brought in $1.45 billion in the third quarter of this year, up 125% year-over-year.

Uber’s food delivery business has been a boon for the company even as it saw its ride-hailing business slump due to the pandemic. It’s no surprise then that Uber is looking to double down on this space by consolidating with Postmates.

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