Here’s what you need to know:
Uber buys Postmates for $2.65 billion as food delivery companies consolidate.
Uber has agreed to acquire the food delivery start-up Postmates for $2.65 billion, as the ride-hailing firm aims to grow its presence in on-demand food delivery while its core business struggles.
The companies announced the all-stock deal on Monday morning. Uber will combine Postmates with its own food delivery subsidiary, Uber Eats, which has been growing during the coronavirus pandemic.
Food delivery apps, which connect drivers, restaurants and customers, have grown quickly in recent years, fueled by venture capital and armies of contract workers. But the services they offer are not very different from one another, leading to heavy competition and pressure to keep fees low. More people have been using delivery services during the pandemic, but profits have been elusive.
As a result, delivery app companies have circled one another, aiming to make deals to gain scale. Postmates previously discussed possible deals with DoorDash, the largest service in the United States, and another rival, Grubhub, according to two people with knowledge of the talks.
In recent months, Uber also discussed buying Grubhub. But last month, Grubhub was instead sold to Just Eat Takeaway, a European delivery company, for $7.3 billion.
Together, Postmates and Uber Eats would have a 37 percent share of food delivery sales in the United States, according to Edison Trends, which tracks credit card spending. DoorDash would remain the largest player with 45 percent, while Grubhub would have 17 percent. — Mike Isaac and Erin Griffith
Wall Street starts the week with more gains.
Stocks on Wall Street followed global markets higher on Monday, extending their gains into a fifth consecutive day.
The S&P 500 was up more than 1 percent in early trading, with shares in Europe climbing 1 percent to 2 percent. In Asia, the Shanghai Composite index soared 5.7 percent after a call in China’s state media for more retail investing. A front-page editorial in the state-run China Securities Journal urged investors to take advantage of “bullish market expectations” coming out of the pandemic.
In Britain, shares in house builders rose after a report suggested that Rishi Sunak, the chancellor of the Exchequer, was considering a stimulus measure that would reduce property tax payments for homeowners. Mr. Sunak is expected to give an overview of the British economy and new stimulus measures on Wednesday.
In the United States, stocks have been on a run that has defied a growing number of coronavirus cases around the world and new measures to contain the virus. That is, in part, a result of data showing that the economy is rebounding from earlier shutdowns. Last week, for example, figures showed that employers added nearly five million workers back to payrolls in June, home purchases rose sharply and consumer confidence jumped.
But with economists consistently warning that the recovery could be slower than markets currently expect, the rally is susceptible to a sudden change in sentiment if indicators shift. Investors also expect lawmakers in Washington to authorize more government spending to offset further economic damage, though the specifics of any spending plan — or the timeline for it — are far from certain.
Warren Buffett makes his first post-pandemic purchase.
Berkshire Hathaway bought Dominion Energy’s gas pipeline network on Sunday in a $9.7 billion deal, including debt.
The acquisition is Warren Buffett’s biggest in four years, putting to use some of Berkshire’s $137 billion cash pile. There has been some investor anxiety lately about Mr. Buffett’s recent drought of deal-making. Buying the Dominion assets would more than double Berkshire’s market share of natural gas movement in the U.S., to 18 percent.
On the same day as the deal was announced, however, Dominion and its partners canceled plans to build the Atlantic Coast Pipeline. Just last month, they had scored a victory when the Supreme Court ruled that the pipeline — which would have moved natural gas from West Virginia to Virginia and North Carolina — could be built under the Appalachian Trail, overruling objections from environmental groups.
In reversing course, the companies said that the six-year-old project faced more legal battles and costly delays that wouldn’t make it worthwhile. The shifting politics of fossil fuels, which may fall more out of favor if Democrats make gains in November elections, as polls currently suggest, could be another factor. In announcing the deal with Berkshire, Dominion emphasized a “narrowing” focus on becoming a more “sustainability focused” utility, reducing its reliance on fossil fuels.
Mr. Buffett appears to believe that the economic benefits of the deal overcome its political risks, argues today’s DealBook newsletter. And he hasn’t ignored the politics of pipelines in other situations. This spring, Berkshire backed away from an investment in a liquefied natural gas export terminal in Quebec amid protests by environmental activists and Indigenous groups. — Michael J. de la Merced
Here’s the business news to watch this week.
⚖️ The U.S. Supreme Court may issue rulings this week on eight cases, including the release of President Trump’s tax returns, birth control in employer-sponsored health care plans and robocalls to cellphones. The court’s extended virtual session has pushed its work into July for the first time in more than 20 years.
🇺🇸🇲🇽 In his first foreign trip as Mexico’s president, Andrés Manuel López Obrador travels to Washington — on a commercial flight — to meet Mr. Trump at the White House on Wednesday. The two plan to celebrate the new North American trade deal, which took effect last week; Prime Minister Justin Trudeau of Canada hasn’t yet decided whether he will attend.
🇬🇧🇨🇦 Speaking of Canada, on Wednesday the finance chiefs of Canada and Britain will discuss the impact of the coronavirus-driven downturn. In Ottawa, Finance Minister Bill Morneau will present the first official post-pandemic projection of Canada’s federal deficit to the country’s Parliament. In London, Britain’s chancellor, Rishi Sunak, will unveil the latest outlook for the British economy, along with potential policy changes to taxes and furlough payments.
🧰 The steady decline in weekly U.S. unemployment claims is expected to stall on Thursday as several states delay or roll back reopening measures. (Deutsche Bank notes that between a third and half of G.D.P. comes from states with worsening coronavirus trends.) Initial claims have been above one million for 15 consecutive weeks.
🗣 It’s a light week for earnings, with the noteworthy names opening their books including Levi Strauss on Tuesday; Bed Bath & Beyond on Wednesday; and Rolls-Royce and Walgreens Boots Alliance on Thursday. — Jason Karaian
China dominates medical supplies, in this outbreak and the next.
Alarmed at China’s stranglehold over supplies of masks, gowns, test kits and other equipment for batting the coronavirus, countries around the world have set up their own factories to cope with this pandemic and outbreaks of the future.
When the outbreak subsides, those factories may struggle to survive. But China has laid the groundwork to dominate the market for protective and medical supplies for years to come.
Factory owners get cheap land, courtesy of the Chinese government. Loans and subsidies are plentiful. Chinese hospitals are often told to buy locally, giving China’s suppliers a vast and captive market.
Once vaccines emerge, demand will plummet. Factories will close. But Chinese companies are likely to have the lowest costs by far and be best positioned for the next global outbreak.
For years, China’s leaders have worried that the country depended too much on foreign sources for everything from medical supplies to microchips to airliners. It has used subsidies, economic targets and other government inducements to emerge as a powerhouse in important industries.
The policies have often proved effective in building industries that can withstand losses and tough foreign competition. Medical supplies may be similar. — Keith Bradsher
With department stores disappearing, malls could be next.
Malls were already in trouble before the pandemic, as shopping had moved increasingly online. But a string of bankruptcy filings by major retailers like Neiman Marcus and J.C. Penney in recent months could hasten their decline.
As many as 25 percent of the nation’s nearly 1,200 malls could shut down amid the fallout from the coronavirus, said Deborah Weinswig, founder of Coresight Research, an advisory and research firm that specializes in retail and technology.
The traditional suburban mall has been built around big department stores that anchored smaller clothing and specialty stores.
Department stores account for about 30 percent of the mall square footage in the United States, with 10 percent of that coming from Sears (which filed for bankruptcy in 2018) and J.C. Penney, according to Green Street Advisors, a real estate research firm.
As the department stores struggle or shut down, other retailers are no longer able to feed off the foot traffic that those large anchors used to generate.
Many small mall retailers have clauses in their leases — so-called co-tenancy clauses — that allow them to pay reduced rent or even break the lease if two or more anchor stores leave a location.
That could lead to even more mall vacancies and few options to fill the empty storefronts during a pandemic when shoppers are already nervous about being in enclosed spaces. — Sapna Maheshwari
What Hong Kong’s pandemic experience taught Uber about other cities.
In late February, Uber executives were set to gather in San Francisco to form business plans for the year as the coronavirus steadily spread beyond China. While some executives who were initially invited had been told to stay home, the remaining few huddled at Uber’s headquarters to make plans for the inevitable pandemic.
One of them, Susan Anderson, who managed Uber’s business in Australia, New Zealand and North Asia, delivered bad news: In Hong Kong, Uber trips had declined rapidly as the coronavirus took hold.
Months later, Uber is facing its greatest crisis: keeping the ride-hailing business afloat when many people are still staying home. Coronavirus totals in the United States, Uber’s highest-revenue market, continue to grow, challenging cities and local businesses that are trying to reopen. And rides, not surprisingly, are only haltingly returning to a semblance of what they were.
Hong Kong, on the other hand, has recovered from the pandemic faster than most other cities where Uber operates. The outbreak has been less severe there than in the United States, and many commuters have gone back to work. Although Uber’s business in Hong Kong is small and doesn’t generate much revenue, the foothold gave the company a preview of how quickly its business would slip away during the pandemic — but also a best-case example of what its recovery elsewhere could look like.
“If the world looked like Hong Kong, we would be in great shape,” Uber’s chief executive, Dara Khosrowshahi, said during a March call with financial analysts. At the peak of the outbreak in Hong Kong, rides declined 45 percent, Uber said. — Kate Conger and Tiffany May
The #vanlife business is booming.
Dozens of new companies are popping up to rent or sell retrofitted sleeper vans, some now with yearlong waiting lists. Apps are surfacing to help these van dwellers find legal parking. Big R.V. park conglomerates are starting to eye the new interest and figure out ways to capitalize.
The last few months have felt chaotic, and the van living sell is that there can be stability in constant motion. “What we say is: We build your escape,” said Leland Gilmore, the founder of Benchmark Vehicles, which makes custom vans. “These are little escape vessels, escape pods.”
Mr. Gilmore typically sells custom vans for $100,000 to $300,000, not including the cost of the van, which is usually a $40,000-and-up Mercedes Sprinter. Demand has nearly doubled since lockdowns began, he said, and Benchmark Vehicles just hired three more people.
Vanlife has been an influencer trend on Instagram for years. It usually involved a good-looking young couple in a van posting gauzy portraits of each other and sweeping scenes of the places they visited. The fantasy life they sold is freedom and simplicity, a radical reduction in burden — but not comfort. For these are not backpackers looking tired and worn, with massive calves and wild hair. Vanlife is an aesthetic trend, closer to the tiny-home movement, yet even richer, lusher and typically sexier.
Ss the pandemic has worn on, it is a fantasy more people are finding themselves having. — Nellie Bowles
Reporting was contributed by Keith Bradsher, Mohammed Hadi, Nellie Bowles, Kate Conger, Tiffany May, Sapna Maheshwari, Michael J. de la Merced, Michael Corkery, Niraj Chokshi, Jason Karaian, Mike Isaac, Erin Griffith and Kevin Granville.
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