Postmates, which is also reportedly mulling a July IPO that could value the San Francisco, California-based company at around $2.4 billion, sits well behind market-leading DoorDash, but still commands a near 10% slice of the U.S. food delivery market. It would also fit into Uber's diversification strategy, with ride traffic falling amid the coronavirus pandemic, while softening the blow of losing out to Just Eat Takeaway in last month's $7.3 billion battle for Grubhub.
The Wall Street Journal said Uber is in talks to buy Postmates, while the New York Times have said a bid for the group has already been made for the nation's fourth-largest food delivery service.
Uber shares were marked 3% higher in early trading Tuesday to change hands at $30.52 each, a move that would nudge the stock into positive territory for the year.
Last month, Uber said a surge in food delivery orders over the first quarter helped revenues beat Wall Street forecasts, even as the group posted a loss of nearly $3 billion for the three months ending in March.
Uber Eats revenues rose 53% from last year, the company said, as customers used the food delivery service amid coronavirus lockdown orders. Rides revenues rose 2%, to $2.47 billion, Uber said, and active platform customers rose 11% to just over 100 million.
"Postmates should continue to benefit from restaurant selection and strong positions in key markets. However, as the fourth-largest player in the US market, we also see it as a potential consolidation target," said Canaccord Genuity analyst Maria Ripps in a recent client note.
Ripps, who highlighted the fact that a smaller percentage of Uber Eats customers use Postmates compares to DoorDash, also noted that "Postmates is the market leader in Los Angeles, one of Uber Eats’ weakest markets."