In its first move into grocery delivery, Uber Technologies Inc. today announced plans to acquire majority ownership of Delivery Technologies SpA, better known as Cornershop, a Latin American grocery delivery startup that Wal-Mart Stores Inc. tried and failed to buy for $225 million.

The deal is expected to be completed in early 2020. Under the transaction terms, Cornershop will continue to operate under the leadership of its founders, who will report to a board of directors comprised mainly of Uber-appointed directors.

The reason Uber opted for this arrangement instead of buying the startup outright is likely tied to the circumstances of Walmart’s failed acquisition attempt. Cornershop accepted the retailer’s offer, but Mexican regulators shot down the deal over concerns it would harm competition. Officials weren’t convinced that the retailer would have allowed rival firms to continue offering their goods through the grocery delivery service.

By not taking full control of Cornerstone, Uber will likely have a better chance of winning over regulators. The fact that the startup will operate independently to a certain degree also suggests Uber plans to continue offering its service on a standalone basis, perhaps even under the current brand.

Chile-based Cornershop currently has operations in Mexico, Peru and Canada on top of its home country. In a statement, Uber Chief Executive Officer Dara Khosrowshahi said that the company will work to “scale their vision, and look forward to working with them to bring grocery delivery to millions of consumers on the Uber platform.”

Uber didn’t disclose the deal’s value. It’s safe to assume that the price is close to the $225 million Walmart offered for Cornerstone, particularly given that the startup had previously raised more than $30 million in funding from investors such as Accel.

The deal kicks Uber’s long-publicized plans to enter the grocery delivery market into high gear. The ride-hailing giant will be facing off against incumbent Instacart Inc. along with more more broadly focused delivery startups such as Doordash Inc. and Postmates Inc., which are making their own forays into groceries.

In the long term, Uber’s sizable investments in autonomous vehicles could help it stand out in this crowded field. The expected cost efficiencies of self-driving cars might enable the company to develop a more attractive grocery delivery offering than rivals that lack the ability to deploy the technology on the same scale.  

Photo: Uber