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Two Third-Party Food Delivery Giants to Merge into One Bigger Giant

Third-party food delivery giant Uber Eats will soon no longer call Postmates a rival—they will be sister companies under Uber Technologies.

Uber Technologies will acquire Postmates for $2.65 billion, expanding its food delivery market share at a time when customers are still anxious about dining out at restaurants—and as coronavirus cases surge dramatically in many states around the country.

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As Nation’s Restaurant News (NRN) reported, the company said in a call with investors that, due to increased efficiencies, the merger could result in lower commission fees for restaurants. But no specifics were offered as to how low the fees might go.

The move, which gives Uber roughly a 30 percent share of the U.S. food delivery market, also makes sense for another reason: According to Reuters, Uber Technologies’ famed ride-hailing service, Uber, has taken a pummeling from COVID-19. The purchase of Postmates also enables Uber Eats to deliver groceries and personal care and fashion items in addition to food.

“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, all the more important during crises like COVID-19,” Uber CEO Dara Khosrowshahi said in a press release announcing the merger.

Related: Why third-party food delivery is so controversial in the pizza industry

The release said Postmates is “highly complementary” to Uber Eats, “with differentiated geographic focus areas and customer demographics, and Postmates’ strong relationships with small- and medium-sized restaurants, particularly local favorites that draw customers to the Postmates brand.”

NRN said the merger will help Uber dominate some key markets in the American Southwest, such as Southern California, Las Vegas and Phoenix.

The Postmates app will continue to run separately from the Uber Eats app, the company noted.

“As more people and more restaurants have come to use our services, Q2 bookings on Uber Eats are up more than 100 percent year on year. We’re thrilled to welcome Postmates to the Uber family as we innovate together to deliver better experiences for consumers, delivery people and merchants across the country,” Khosrowshahi said.