September 21, 2018updated 24 Sep 2018 10:51am

Uber in talks to buy food delivery service Deliveroo

By Priya Kantaria

Uber is said to be in talks to buy London-based food-delivery app Deliveroo, which is valued at around $2bn, according to Bloomberg reports.

The purchase price would be set at several billion dollars reports Bloomberg, but the exact figure is not known yet as the two companies are only in early discussions.

Uber and Deliveroo have not confirmed the reports.

Uber focus on food delivery service

UberEats business works across more than 290 cities and this year has been pushing into new markets in Europe, the Middle East and Africa. In contrast, Deliveroo is available across around 200 cities on four continents, but not yet in the United States. While according to Edison Research UberEats is the second largest food delivery service in the US with just under 28% of overall market share.

Uber chief executive Dara Khosrowshahi  has previously told the Financial Times that he was planning to put money into UberEats for the next three years.

He said: “That’s a business that at this point has such a large addressable market and is growing so fast that it makes lots of sense to invest.”

SoftBank focuses investment with Uber

Uber walked away with over $1bn from the Japanese conglomerate in 2017, after it ended investment talks with Deliveroo and decided to focus on Uber.

Softbank advised Uber to prioritise food-delivery since it sold its taxi businesses in southeast Asia, China and Russia.

Uber has its initial public offering next year and will be trying to take greater market share in both food delivery and ride-hailing.

Uber had a bad 2017

Uber faced controversy in 2017 with issues pilling up on the company thick and fast. It included a lawsuit by Google parent Alphabet’s self-driving car unit, Waymo, that alleged it stole tech secrets and a former Uber employee claimed the company is riddled with endemic sexual harassment amongst some of the most headline grabbing events.

The company then lost its licence to operate in London after Transport for London turned down its renewal in September 2017.

In August it was time to bring in a new CEO as former Expedia boss Dara Khosrowshahi took over.

At the end of 2017 Uber lost its spot as the world’s most valuable start-up to arch rival China’s Didi Chuxing.

Deliveroo’s popularity grows

In contrast to Uber’s woes, Deliveroo has swung from strength to strength, in spite of concerns in early 2017 for Deliveroo riders’ safety amid acid attacks.

In March 2018 Deliveroo launched a line of eco-packaging, providing restaurants with 50 new products to help them offer sustainable packaging.

In 2017 Deliveroo revealed it had raised another $275m from investors to fund expansion.

Back then analysts were saying it was close to joining the so-called unicorn herd, which include tech startups such as Uber that are judged to be worth more than $1bn.

Deliveroo chief executive Will Shu, in a 2017 interview with Business Insider, said an IPO would be the next logical step for the company and had the US in his sights.

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