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Uber bets on delivery with $2.65 billion acquisition of Postmates as ride-hailing stalls – MarketWatch

In the race to gain a competitive edge in the burgeoning food-delivery business, the major players are carving up the U.S. map.

Uber Technology Inc.’s

intention to acquire privately held Postmates Inc. for $2.65 billion after its failed bid for Grubhub Inc.

is a case in point.

See also: Uber to buy Postmates for $2.65 billion: reports

The takeover would help Uber Eats gain ground against privately held DoorDash Inc., the current market leader in the U.S., through Postmates’ strong sales in Los Angeles, Las Vegas, Phoenix, San Diego and Miami. DoorDash remains the dominant player in New York — where it commands more than half the local market — and San Francisco. Grubhub, gobbled up by Europe’s JustEat Takeaway.com for $7.3 billion in June, is well established in the Midwest.

“We’ve always admired Postmates, I guess, begrudgingly from afar in that it was a competitor who was able to compete aggressively and to be a leader in some very important markets with a much smaller capital base than a lot of its competition, including ourselves,” Uber Chief Executive Dara Khosrowshahi said on a conference call Monday to discuss the deal.

A merged Uber-Postmates would control about 37% of the national market, versus DoorDash’s 45%, based on data from Edison Trends. Postmates’ presence has declined in the face of withering competition from deeper-pocketed competitors. In June, it had a market share of about 8%.

Market consolidation has been inevitable as the coronavirus pandemic accelerates public adoption of food delivery, and companies like Uber diversify their businesses amid a massive slump in ride-hailing revenue.

A land grab was necessary in the U.S., Forrester analyst Sucharita Kodali says, because the European market is already consolidated. In April, Amazon.com Inc.

received provisional approval for its $575 million investment in UK-based startup Deliveroo.

Wall Street heartily applauded Uber’s move, sending its shares up 6% in trading Monday. Grubhub’s stock rose 4.4%.

Uber, which announced 3,000 additional layoffs following an 80% drop in ride volume in April, signaled a hard pivot to food delivery. Gross bookings for its Eats business were up 52% year over year in the first quarter. (Bookings on Uber Eats more than doubled in the second quarter, Khosrowshahi said Monday.)

“At a time when our Rides business is down significantly due to shelter-in-place, our Eats business is surging,” Khosrowshahi said on the company’s earnings call in early May.

See also: Uber loses nearly $3 billion in three months, but stock rebounds after hours

Uber, which has been looking under the hood at several food-delivery companies for more than a year, initially set its sights on Grubhub. But neither side could agree on a selling price, and the combined operation would have surely faced antitrust scrutiny as the unquestioned market leader.

At the time, Wedbush Securities analyst Ygal Arounian said any buyer of Grubhub would acquire market share in New York, Boston and Chicago “at a premium, in order to speed up rationalization through market-share dominance.”

Read more: Opinion: Uber plus Grubhub called ‘a new low in pandemic profiteering,’ and that’s not the only problem

Postmates, which has flirted with an initial public offering, should greatly help Uber expand delivery into more groceries and other small goods, according to Uber. Postmates recorded $107 million in revenue from $643 million in gross bookings in the first quarter of this year, according to a presentation during Monday’s acquisition announcement.

“Postmates, which is the clear #4 player behind DoorDash, Uber Eats, and Grubhub, would be both a defensive and offensive acquisition in the food delivery space for Uber at a time with its core ride-sharing business seeing massive headwinds in this COVID-19 pandemic,” Wedbush analyst Dan Ives said in a note Monday.

For consumers, ultimately, consolidation could lead to more efficient delivery systems at lower costs, says Rebecca Allensworth, a law professor at Vanderbilt University.

Read More: Uber bets on delivery with $2.65 billion acquisition of Postmates as ride-hailing stalls – MarketWatch

More than a dozen kinds of hand sanitizer should be avoided because they may contain methanol, a toxic substance when absorbed through skin or ingested.

The Food and Drug Administration says many of the products have been voluntarily recalled with other products being recommended for recalls because they may contain the potentially fatal ingredient. All of the products in the FDA’s latest methanol update were produced in Mexico.

The FDA says it has “seen a sharp increase in hand sanitizer products that are labeled to contain ethanol (also known as ethyl alcohol) but that have tested positive for methanol contamination.”

The recalls come after the FDA warned consumers in June not to use nine kinds of hand sanitizers because they may contain the potentially fatal ingredient.

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“Methanol is not an acceptable active ingredient for hand sanitizers and must not be used due to its toxic effects,” the FDA said, noting its investigation of methanol in certain hand sanitizers is ongoing.

Methanol is used industrially as a solvent, pesticide and alternative fuel source, according to the Centers for Disease Control and Prevention. Exposure to it can cause nausea, vomiting, headache, blurred vision, permanent blindness, seizures, coma, permanent damage to the nervous system and death.

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Children who accidentally ingest hand sanitizer and young people who drink hand sanitizer as an alcohol substitute are at an increased risk for methanol poisoning, the FDA said. 

The CDC says hand-washing with soap and water for at least 20 seconds is the best way to clean your hands, but when that’s not an option, the agency recommends using an alcohol-based hand sanitizer with at least 60% alcohol.

Hand sanitizer has been a popular product to combat the coronavirus since February and many new types of hand sanitizer have entered the market after shortages of brands including Purell.

Recalled hand sanitizers

  • ITECH 361’s All Clean Hand Sanitizer, Moisturizer and Disinfectant: UPC code 628055370130.
  • Transliquid Technologies’ Mystic Shield Protection hand sanitizer: NDC numbers include 75477-435-02, 75477-435-10, 75477-435-12, 75477-435-25, 75477-435-50 and 75477-534-10.
  • Saniderm Advanced Hand Sanitizer, 1-liter bottles: Two distributors. The UVT hand sanitizer is labeled with lot number 0530 and an expiration date of 04/2022 and the Saniderm Products hand sanitizer is labeled with lot number 53131626 and “Manufactured on April/1/20.”

Other sanitizers containing methanol

The FDA is advising consumers not to use the following hand sanitizers because tests found them to contain methanol or that they were “purportedly made at the same facility as products in which FDA has tested and confirmed methanol contamination.” 

  • Grupo Insoma’s Hand Sanitizer Gel Unscented 70% Alcohol: NDC numbers include 75744-0200-3, 75744-0200-4, 75744-0201-5, 75744-0202-1, 75744-0250-1, 75744-0250-2, 75744-0500-1, 75744-1000-1, 75744-1000-3 and 75744-1001-1.
  • Soluciones Cosmeticas’ Bersih Hand Sanitizer Gel Fragrance Free: NDC numbers include 75165-003-02, 75165-004-01, 75165-005-01, 75165-006-01, 75165-008-01, 75165-250-01 and 75165-600-01.
  • Soluciones Cosmeticas’ Antiseptic Alcohol 70% Topical Solution hand sanitizer: No NDC numbers listed.
  • Tropicosmeticos’ Britz Hand Sanitizer Ethyl Alcohol 70%: NCD numbers include 76676-402-01, 77676-402-02, 77676-402-03, 77676-402-04, 77676-402-05, 77676-402-06, 77676-402-07, 77676-402-08, 77676-402-09, 77676-402-10, 77676-402-11, 77676-402-12, 77676-402-13, 77676-402-14, 77676-402-16, 77676-402-17, 77676-402-18, 77676-402-19 and 77676-402-20.

These Eskbiochem products should be avoided, according to the FDA:

  • All-Clean Hand Sanitizer: NDC 74589-002-01
  • Esk Biochem Hand Sanitizer: NDC 74589-007-01
  • CleanCare NoGerm Advanced Hand Sanitizer 75% Alcohol: NDC 74589-008-04
  • Lavar 70 Gel Hand Sanitizer: NDC 74589-006-01
  • The Good Gel Antibacterial Gel Hand Sanitizer: NDC 74589-010-10
  • CleanCare NoGerm Advanced Hand Sanitizer 80% Alcohol: NDC 74589-005-03
  • CleanCare NoGerm Advanced Hand Sanitizer 75% Alcohol: NDC 74589-009-01
  • CleanCare NoGerm Advanced Hand Sanitizer 80% Alcohol: NDC: 74589-003-01
  • Saniderm Advanced Hand Sanitizer: NDC: 74589-001-01

Contributing: Elinor Aspegren

Follow USA TODAY reporter Kelly Tyko on Twitter: @KellyTyko

Read More: Multiple brands of hand sanitizer recalled or should be avoided due to methanol risk, FDA says. See the list. – USA TODAY