Ride-hailing giant Uber has agreed to acquire Boston-based on-demand alcohol delivery platform Drizly for $1.1 billion. More than 90-percent of the purchase will be made through Uber stock. The company will pay the remaining balance to Drizly stakeholders in cash. The two companies expect the deal to close in the first half of the year.
This is Uber’s biggest acquisition since it acquired the food-delivery platform Postmates back in July 2020. The $2.65 billion deal was completed in December.
The COVID-19 pandemic induced lockdown measures severely affected Uber’s ride-hailing business last year. The company’s food delivery business Eats reportedly surpassed rides in terms of revenues for the first time in Q2 2020. It is now looking to expand its business to more categories with the acquisition of Drizly. Uber already offers packages, groceries, and prescription delivery services in some parts of the US.
Drizly, on the other hand, offers beer, wine, and spirits delivery services in the majority of US states. The startup reportedly has retail partners in more than 1,400 American cities. Following this acquisition, the platform will operate as a wholly-owned subsidiary of Uber. It will be available as a separate app as well as through the Eats platform.
Drizly also operates a cannabis delivery service called Lantern. However, this acquisition excludes that business. Uber reportedly showed no interest in cannabis delivery for the time being. Launched in May 2020, Lantern currently operates in Boston and Detroit. It sells marijuana products, including edibles such as chocolate and chews with cannabis.
Uber beats out rival companies to acquire liquor delivery startup Drizly
According to Bloomberg, Uber has beaten out at least two rival companies that had held talks with Drizly for a potential acquisition. The startup reportedly held sale talks with DoorDash, the largest food delivery app in the US, and GoPuff, a Philadelphia-based digital delivery service, before finalizing on a deal with Uber.
GoPuff is backed by the Japanese multinational conglomerate SoftBank Group. It recently acquired another liquor delivery startup BevMo in an all-cash deal for about $350 million. BevMo is based in Concord, California, and has 161 stores in California, Arizona, and Washington.
Research firm PitchBook had reportedly valued Drizly at $73 million in 2017. The platform saw a 400-percent growth in liquor orders during the height of lockdown measures last year. With more people staying home, both the frequency and volume of orders increased in and around May 2020.
“We want to be synonymous with alcohol,” said Cory Rellas, the CEO of Drizly. “While we believe we could get there by ourselves over the coming five or ten years, this is really an acceleration,” he added.