(Reuters) -Uber Technologies Inc is to buy on-demand alcohol platform Drizly for about $1.1 billion in a largely stock-based deal as the company looks to expand delivery services that have flourished during the pandemic.
Uber said on Tuesday the Drizly acquisition will allow the company to offer beer, wine and spirits in the majority of U.S. states in addition to groceries, package and prescription delivery it recently launched in some U.S. cities.
The COVID-19 pandemic induced lockdown measures across the world dealt a blow to Uber’s ride-hailing services, pushing the company to branch out into new categories of delivery services.
Revenue from Uber’s food delivery business Eats surpassed rides revenue for the first time in the second quarter of 2020.
Uber declined to give details on what demand it projects for alcohol sales, but said Drizly had grown gross bookings profitably 300% on a yearly basis.
Uber shares were up 6.5% at $56.20 on Tuesday.
Drizly, which says it works with retail partners in more than 1,400 North American cities, will become a wholly-owned subsidiary of Uber. It will be integrated into the Eats platform, while also maintaining its separate app.
Drizly in May 2020 launched Lantern, a cannabis delivery service currently operating in Boston and Detroit, its website said. Uber told Reuters that Lantern is not part of the Drizly deal.
In a Tuesday interview with CNBC, Uber CEO Dara Khosrowshahi said the company was currently not actively interested in cannabis delivery, but could be more open down the road.
Lantern sells marijuana products, including plants for smoking, cannabis vaping products and edibles, including chocolate and chews with cannabis, its website said.
Uber expects that more than 90% of the deal will be made through Uber stock and the balance paid in cash to Drizly stockholders.
Reporting by Subrat Patnaik in Bengaluru, Tina Bellon and Krystal Hu in New York; Editing by Shinjini Ganguli and Jane Merriman
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