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Law360 (May 13, 2020, 4:53 PM EDT ) Uber said Wednesday it's weighing a $750 million note offering to help it ride out the coronavirus pandemic, the day after reports surfaced that the ride-hailing giant is considering a Grubhub acquisition to beef up the food delivery aspect of its business.
California-based Uber Technologies Inc. said the proceeds from the offering would be used for working capital and general corporate purposes, "which may include potential acquisitions and strategic transactions," the announcement said. The Wall Street Journal reported Tuesday that Uber is in talks to acquire Grubhub Inc., a move that, if completed, would bring together the food delivery company with Uber's own meal delivery service, Uber Eats.
It's not yet clear if such a deal will materialize. But Uber said in a Wednesday filing with the U.S. Securities and Exchange Commission that travel restrictions and social distancing policies have dented demand for its ride-hailing service and its so-called "new mobility" offerings, which focus on alternative transportation options such as electric bikes and scooters. As a result, the company has shifted its focus to other aspects of its business, including food delivery, the filing said.
"The pandemic has reduced the demand for our rides offering globally and has disrupted the supply chain related to our new mobility offerings," Uber said. "We have responded to the COVID-19 pandemic by launching new, or expanding existing, services or features on an expedited basis, particularly those related to delivery of food and other goods."
Last week, the company inked a deal that will see Uber divest its dockless e-bike and e-scooter business to Lime. In exchange, Uber will take a 16% stake in the electric scooter and bike rentals company, make an $85 million investment in the company and ink a business collaboration agreement, the filing said.
Certain cost-saving measures will affect Uber Eats, as the company prepares to end the service in several countries including Egypt, Honduras, Saudi Arabia and Ukraine, the filing said. The company has also said that its Uber Eats operations in the United Arab Emirates would be transferred to its Middle Eastern subsidiary Careem.
Uber has also slashed staffing in its customer support and recruiting roles, eliminating roughly 3,700 full-time employees, the disclosure said.
The filing highlighted Uber's efforts to support drivers, saying it has implemented a financial assistance program, distributed personal protective equipment and committed to providing 10 million free rides and food deliveries to vulnerable groups such as health care workers and seniors.
Uber is far from the only transportation company grappling with the effects of the pandemic. Wednesday's announcement comes one day after its rival, Lyft Inc., said it priced a $650 million private offering of convertible senior notes.
Both Uber and Lyft are also grappling with worker classification disputes that have been compounded during the pandemic, including questions of sick leave. Uber told a California federal judge in April that it would roll out greater sick leave protections as part of a negotiated resolution with California drivers who claimed the ride-hailing company was exacerbating the COVID-19 pandemic. At the time, the drivers' counsel said the resolution put to rest the drivers' bid for an emergency order seeking to classify drivers as employees rather than independent contractors.
But the protracted dispute over California's new worker classification law wages on, with both the California attorney general and Uber, among others, firing shots in court last week. The ultimate outcome could seriously affect Uber's business, the company said in Wednesday's filings.
Representatives for Uber did not immediately respond to a request for comment on Wednesday.
Counsel information was not immediately available.
--Additional reporting by Hannah Albarazi, Braden Campbell, Linda Chiem and Vin Gurrieri. Editing by Alanna Weissman.
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