Uber has confirmed that it’s buying on-demand delivery company Postmates in an all-stock deal valued at $2.65 billion.

Uber has confirmed that it’s buying on-demand delivery company Postmates in an all-stock deal valued at $2.65 billion. The announcement comes after a week of speculation which culminated in Bloomberg reporting earlier today that the deal was done, though neither company has responded to the claims until now.

Postmates had been a hotly anticipated IPO candidate for 2020 having initially filed its paperwork confidentially with the Securities and Exchange Commission (SEC) last year, but the San Francisco-based company shelved those plans due to a lukewarm response from investors. However, Postmates was reportedly preparing to revive those plans as soon as this week, perhaps giving a greater degree of urgency to Uber’s push to consolidate the fiercely competitive food delivery market.

Founded in 2011, Postmates emerged as one of the main players in the on-demand food delivery sphere, partnering with restaurants and other eateries to give them easy access to a smartphone-based delivery network. Although the platform is perhaps better known for delivering food, in reality it can be used to courier just about any item between a merchant and the buyer. This is pretty much similar to how Uber has evolved too, starting out as the logistics infrastructure for taxi-like transport services, before reappropriating the technology for its burgeoning Uber Eats food delivery service. A few months back, Uber also unveiled a new service called Uber Connect, which repositions its platform as a courier service — friends and family can use it to transport most goods from A to B.

Although Postmates briefly flirted with international expansion with a Mexico launch back in 2017, the platform is now exclusively available to U.S. consumers, making this acquisition a purely domestic play by Uber. Indeed, Uber has been pushing to consolidate the U.S. food delivery market for some time, having reportedly mulled a merger with Postmates’ rival DoorDash last year — instead, DoorDash confidentially filed for an IPO earlier this year, before going on to raise another $400 million while placing a question mark over the timescale for its plans to go public. Uber also pursued food delivery juggernaut Grubhub, which was eventually snapped up by European rival Just Eat in a $7.3 billion deal back in June.

Uber is no stranger to strategic acquisitions, having recently closed its $3.1 billion acquisition of Middle Eastern ride-hail rival Careem and bought a controlling stake in Latin American grocery delivery startup Cornershop. On the flipside, Uber has also divested a number of its local businesses to more-established rivals in Eastern Europe, China, and Southeast Asia.

Having failed to procure market leader DoorDash and Grubhub, it makes sense that Postmates would be next in line for Uber’s M&A team. According to consumer data analytics firm Second Measure, Postmates had 8% of the U.S. food delivery market in May, behind Uber Eats (22%), GrubHub (23%), and DoorDash (45%). Based on that data, Uber will now be the clear second biggest player in the domestic food delivery market.

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