Uber Technologies Inc. agreed to acquire Drizly Inc., which makes an on-demand alcohol delivery app, for $1.1 billion, beating out at least two rival companies that held talks with the startup.
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 companies said in a statement Tuesday. The acquisition excludes Drizly’s cannabis delivery arm, an Uber spokesman said. Uber shares climbed about 7%.
Before cinching the deal, Drizly held sale talks with DoorDash Inc., the largest food delivery app in the U.S., and GoPuff, the SoftBank-backed delivery company that recently acquired BevMo!, said people familiar with the discussions. Neither reached an agreement, said the people, who asked not to be identified because the discussions were private. The companies either declined to comment or didn’t respond to requests for comment about the discussions.
Drizly has had a breakout year as consumers stuck at home ordered in alcohol instead of venturing to the store. The Boston-based company operates in more than 1,400 U.S. cities connecting customers with local stores to order beer, wine and liquor. In May, around the height of U.S. lockdowns, sales were about 400% above historical levels, the company said. Consumers both ordered more frequently and bought more per order, it said at the time.
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%.
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.
“We want to be synonymous with alcohol,” Cory Rellas, the chief executive officer of Drizly, said in an interview Tuesday on Bloomberg Television. “While we believe we could get there by ourselves over the coming five or 10 years, this is really an acceleration.”
Investors in Drizly will want to break open a bottle of Champagne. The company was valued at $73 million in 2017, according to an estimate from research firm PitchBook. Investors include Polaris Partners and Tiger Global Management LLC, the researcher said.