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Illustration: Sarah Grillo/Axios

Uber has agreed to acquire food delivery company Postmates for $2.65 billion in an all-stock deal, the companies announced Monday.

Why it matters: This is the latest merger for the food delivery space as the sector undergoes an ongoing market consolidation.

The big picture: The Uber-Postmates tie-up would still put the combined businesses' market share behind DoorDash, which has about 45% of the U.S. food delivery market, according to credit card spending tracking companies.

  • Postmates has raised just over $900 million in total funding, and was last valued at $2.4 billion post-money.
  • This deal also showcases Postmates' prowess in the Los Angeles and Miami markets, where the company has strong market share.

Between the lines: It's not surprising to see Postmates get acquired. Though it paused its IPO ambitions last year, the company was recently rumored to resume plans to go public and was also looking to raise new funding, as Axios reported.

  • Uber has also been drastically reshaping its business since the beginning of the coronavirus pandemic. Its ride-share business has significantly suffered, dropping by as much as 70% in April, and it recently offloaded its scooter and bike rental unit. However, its food delivery arm has seen a surge as restaurants turned to delivery to remain afloat.
  • The pandemic has also made ride-hailing and delivery more costly for the companies across these industries as they've had to provide more resources to drivers, including paid sick leave and cleaning supplies.

What's next: Both Postmates and Uber have opposed a newly effective California labor law that could force the companies to reclassify their drivers from independent contractors to employees. The companies are backing a state ballot measure to change the law in the coming November elections.

Go deeper

The gig economy is on the ballot

Illustration: Aïda Amer/Axios

Prop 22 is shaping up to be California's most expensive ballot question ever, and its outcome could upend a gig economy business model that's attracted hundreds of billions of investment dollars.

The state of play: Prop 22, supported by such companies as DoorDash and Uber, is favored in most recent polling. But it's no sure bet, due to a large chunk of still undecided voters.

Europe's energy reliance on Russia is a crucial shield for Putin

Photo: Pavel Bednyakov/Sputnik/AFP via Getty Images

Cracks in the NATO alliance regarding sanctions for Russia should President Vladimir Putin order troops into Ukraine are in large part based on energy supply concerns.

Why it matters: Russia holds tremendous leverage over some European countries because it provides roughly 40% of Europe's natural gas supply. In Germany, this figure is greater than 50%.

Why the Fed might want to jolt the markets

Fed chair Jerome Powell at a hearing earlier this month. Photo: Brendan Smialowski-Pool/Getty Images

So far, financial markets are cooperating nicely with the Federal Reserve's efforts to restrain inflation. They're doing the Fed's work for it by creating tighter financial conditions, in a distinctly non-panicky way.

  • But as the central bank's policymakers meet this week, an underlying question they face is whether the adjustment is happening too slowly.