Uber Technologies said on Monday it would buy Postmates in a US$2.65-billion deal, looking to expand its reach into the food-delivery market as the coronavirus crisis upends its core ride-hailing business.

The move is just weeks after Uber walked away from a deal to buy Grubhub, which would have given Uber’s money-losing restaurant delivery service a leg up on market leader DoorDash. US online food delivery company Grubhub agreed to be acquired in June by Just Eat Takeaway.com in a $7.3-billion deal.

Uber, which has been under pressure as ride-hailing services across the globe plummet because of lockdowns, offered a premium of about 10% on Postmates’ last valuation of $2.4-billion. Uber shares were up about 9% in pre-market trading.

“As more people and more restaurants have come to use our services, Q2 bookings on Uber Eats are up more than 100% year on year,” said Uber CEO Dara Khosrowshahi.

Uber currently estimates that it will issue about 84 million shares of common stock for 100% of the fully diluted equity of Postmates, the company said in a statement.

The boards of both companies have approved the transaction, and stockholders representing a majority of Postmates’ outstanding shares have committed to support the transaction, it added.

‘Postmate it’

Postmates operates in 4 200 US cities delivering food and other products from restaurants and stores to customers’ doorsteps. One of the many taglines reads: “Have chips but no guac? Postmate it.”

Founded in 2011, San Francisco-based Postmates accounted for 8% of the US meal delivery market in May, with its biggest rival DoorDash leading with a 44% market share, according to analytics firm Second Measure.

Postmates in September raised $225-million in a private fundraising round. The company’s biggest rival, DoorDash, raised $400-million from private investors at a valuation of $16-billion in June. — Reported by Subrat Patnaik, (c) 2020 Reuters