Uber Technologies Inc. said on Monday it would buy Postmates Inc 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.

US online food delivery company Grubhub agreed to be acquired in June by Just Eat Takeaway.com NV in a US$7.3 billion deal

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 NV in a US$7.3 billion deal.

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

“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,” said Uber Chief Executive Officer Dara Khosrowshahi.

Uber currently estimates that it will issue about 84 million shares of common stock for 100 percent 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.

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

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

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Postmates in September raised US$225 million in a private fundraising round. The company’s biggest rival, Doordash, raised $400 million from private investors at a valuation of US$16 billion in June.

Uber Technologies Inc. has agreed to acquire Postmates Inc. in a US$2.65 billion all-stock takeover expected to be announced as soon as Monday morning in the US, according to people familiar with the matter.

Uber Eats head Pierre-Dimitri Gore-Coty is expected to continue to run Uber’s combined delivery business, according to a person who asked not to be identified discussing a private deal

Uber Eats head Pierre-Dimitri Gore-Coty is expected to continue to run Uber’s combined delivery business, according to a person who asked not to be identified discussing a private deal. Under their agreement, Postmates Chief Executive Officer Bastian Lehmann and his team will stay on to manage Postmates as a separate service, another person said.

The takeover would help Uber gain ground against privately-held DoorDash Inc., the current market leader in US food delivery. While Postmates hasn’t kept pace with DoorDash, it maintains a strong position in Los Angeles and the American Southwest, both of which could be valuable to Uber Eats.

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Representatives for Uber and Postmates declined to comment.

Uber and Postmates had held discussions on and off for about four years but the talks accelerated about a week ago after Uber approached the latter firm, one of the people said. The move for Postmates comes on the heels of Uber’s failed bid to acquire publicly traded GrubHub Inc., which was scooped up by Europe’s Just Eat Takeaway.com NV for US$7.3 billion. Uber’s board of directors has approved the deal, a person said, though the plans could still be subject to change.

Uber closed at US$30.68 on Friday, after it had gone up more than 4 percent on initial reports of its bid for Postmates.

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Founded in 2011, Postmates was one of the first to let customers in the US order meal delivery using a mobile app. However, competition has intensified in recent years and Postmates has fallen to a distant fourth. The company said in February 2019 that it had filed paperwork confidentially for an initial public offering but never went public. It raised private capital last year in a deal that valued the business at US$2.4 billion.