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UBER to Buy Remainder of Cornershop, Expand Delivery Unit

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Uber Technologies (UBER - Free Report) has entered into an agreement to acquire the remaining 47% interest in South American online grocery-provider Cornershop, per a SEC filing.

Previously, in the third quarter of 2020, the company acquired a majority stake in Cornershop, except in Mexico, which was closed in January 2021. The remaining 47% stake will be acquired in an all-stock deal for approximately 29 million shares (including approximately 4 million shares in outstanding stock options) of Uber. Subject to customary closing conditions, the transaction is expected to close this July.

With Uber’s Mobility business witnessing softness amid the coronavirus pandemic due to low ride volumes, its focus on expanding its Delivery segment is prudent. The Delivery unit has experienced a surge in online order volumes amid the pandemic-induced social-distancing norms and lockdowns in 2020. The uptrend has continued in 2021 and is here to stay for a while now.

In a bid to expand its delivery network, last December, the company acquired Postmates, widening its presence in Los Angeles and the American Southwest, where the latter had a strong base.  In another move to expand its delivery business, Uber has entered into a deal to acquire alcohol delivery startup Drizly Inc. for $1.1 billion. Drizly operates across more than 1,400 cities in the United States. Upon completion of the acquisition within the first half of 2021, Drizly’s marketplace will be integrated with the Uber Eats app. A separate Drizly app will also be available.

Zacks Rank & Key Picks

Uber carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Internet - Services industry are Facebook (FB - Free Report) , Marchex (MCHX - Free Report) and United Internet (UDIRF - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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