- Katie Canales/Business Insider
- Uber considered buying the delivery startup Caviar from Square before it sold to DoorDash, its CEO said Friday.
- Dara Khosrowshahi told CNBC that the company wasn’t interested in buying out US competitors and instead wanted to grow Uber Eats organically.
- “You can expect us to look at every single deal out there in the marketplace,” he said. “We’re Uber – everyone wants to talk to us.”
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A frenzy of acquisitions are happening in the red-hot food-delivery space, but Uber doesn’t appear interested in making a play.
Uber considered buying its couriering competitor Caviar this summer but ultimately passed on the deal, CEO Dara Khosrowshahi told CNBC on Friday morning. Caviar was eventually sold by its owner, Square, to DoorDash in a $410 million cash-and-stock deal.
“You can expect us to look at every single deal out there in the marketplace,” Khosrowshahi told David Faber and Jim Cramer minutes before Friday’s opening bell, as Uber investors braced for a more than 8% decline following the company’s disastrous earnings report the afternoon prior. “We’re Uber – everyone wants to talk to us.”
He added: “We took a look at Caviar. It’s a great brand, but it wasn’t the right deal for us.”
The former Expedia executive declined to comment on whether he thought DoorDash overpaid for the company, which shares an elevator bank with Uber in the company’s San Francisco headquarters on Market Street. He did, however, hint that Uber might not be involved in many US acquisitions in the space, despite mergers gaining steam in recent months, with more potentially on the horizon.
“We just think the best growth vector for us with Eats, especially in the US, is organic,” he said. “We are now, with the Uber-wide loyal program, increasingly getting users into Uber Rides and then Eats and essentially moving them back and forth between the two. We think it creates a customer-acquisition-cost advantage over other players, and we think it creates a lifetime value advantage over the other players. “
In addition to Caviar, there have been a string of delivery megamergers in recent months in the US and Europe. Robert Mollins, an analyst at Gordon Haskett, says that’s likely to continue.
“We expect to see further consolidation in the third-party delivery space globally and expect to see an increased level of interest in companies that can complement third-party delivery offerings such as loyalty, white label apps and labor scheduling capabilities,” he told clients in a note earlier this month.
Uber, for its part, sounds likely to avoid the trend, despite ending the quarter with more than $11 billion in cash or cash equivalents on its balance sheet.
“What we’re confident of is that our eats business is much more efficient from a marketing standpoint than any of our US competitors,” Khosrowshahi said. “That’s the power of the platform and that’s where we’re focused.”