Cab aggregator Uber Technologies Inc. agreed to buy an on-demand alcohol delivery app Drizly Inc, for $1.1 billion.
The company said in a statement on Tuesday, “The deal is Uber’s biggest since July when it bought Postmates, a food delivery app. The Drizly purchase primarily consists of Uber stock, with less than 10% in cash. The acquisition excludes Drizly’s cannabis delivery arm.”
Soon after the announcement, Uber’s shares jumped about 7 per cent.
The Boston-based company saw a boom this year with people being stuck at due to the Coronavirus pandemic and ordering alcohol at home instead of venturing to the store. Sales skyrocketed about 400% at the peak of U.S lockdown in May, where the consumers both ordered more frequently and bought more per order. The company operates in more than 1400 US cities connecting customers with local stores to order beer, wine and liquor.
The Coronavirus pandemic transformed Uber from a company that primarily transported people into one that mostly delivers food from restaurants. In response, the San Francisco-based company has spent the last year making deep cuts to spending, including headcount reductions and asset sales. It sold off units that rented electric bicycles, developed self-driving car technology and explored flying taxis. Uber shifted resources to delivery services, and in the third quarter, delivery sales increased 125 per cent.
The Drizly purchase will add an expansive selection of products for Uber and represents a wager that demand for home delivery will persist after the pandemic subsides. Uber will make Drizly’s alcohol inventory available within the Uber Eats app, alongside meals and groceries, while maintaining a separate Drizly app. The deal is expected to close in the first half of the year, the companies said.
