Businessupdated 2h ago2 min read
DoorDash Agrees To Buy Instacart In About $17 Billion Deal
“American Economic Liberties Project (AELP), an anti-monopoly advocacy group, pushing regulators to block the deal”
“It’s not yet clear what the deal will mean for some partnerships.”
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DoorDash agrees to acquire Instacart for about $17 billion. Deal values Instacart at $65 per share in cash and stock.
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DoorDash buys Instacart
DoorDash agreed to buy Instacart in a deal valued at about $17 billion, with DoorDash paying $65 per share in cash and stock, as the companies announced on Thursday. The Instacart brand name and app will remain, and Instacart shoppers would be able to continue fulfilling orders as before, while grocers can choose to work with Instacart or DoorDash. Instacart customers will now have access to 50,000 additional stores covered by DoorDash, on top of the nearly 100,000 stores on the Instacart platform today.
Instacart, founded in 2012, specializes in grocery and convenience store delivery in the U.S. and Canada, and its 600,000 shoppers completed 338 million orders last year, according to company filings. Tony Xu, co-founder and CEO of DoorDash, said in a statement that "Grocery is one of the hardest things to get right online."
Premium, funding, timing
DoorDash will pay $65 per share in cash and stock, a 26% premium over Instacart’s closing price on October 22, the last trading day before Bloomberg News and The Information reported that the grocery delivery company was exploring a sale. DoorDash plans to use its treasury and a loan from JPMorgan Chase & Co. to finance the acquisition, and the deal is expected to close by the end of 2027 or in the first half of 2028. The deal, announced Thursday, marks an end for Instacart as an independent company, and Instacart went public in 2023.
At least 75% of the consideration will be cash, and the deal requires regulatory and shareholder approval. Chris Rogers, CEO of Instacart, said in a statement, "Joining forces with DoorDash allows us to do even more," as the companies laid out how the combined service would work.
Regulatory risk and market
The American Economic Liberties Project pushed regulators to block the deal because it would control nearly 60% of the third-party grocery delivery market, and Lee Hepner, Senior Legal Counsel at the AELP, said, "This merger represents the next frontier of data-driven abuse." The agreement would eliminate the exclusivity deals that grocery stores had with delivery platforms, and independent contractors would still be free to choose whether to accept DoorDash orders or to primarily handle Instacart purchase requests. DoorDash expected to keep the Instacart brand and its technology until the transaction closes, and the companies would continue to operate as separate and independent companies.
The combined company would offer grocers and retailers of every size DoorDash’s delivery network and Instacart’s grocery and fulfillment technology, in both apps and on stores' own websites. DashPass and Instacart+ members would pay one membership fee instead of two, which it said could save customers an estimated $100 million per year on membership fees alone.