DoorDash buys Instacart in US$17bn grocery delivery deal
DoorDash has agreed to buy Instacart for about US$17 billion, marking its biggest acquisition. The deal aims to boost DoorDash's position in the US grocery delivery market amid rising competition from Amazon and Walmart. It faces potential antitrust hurdles and is expected to close by early 2028.
DoorDash has agreed to buy Instacart in a deal valued at about US$17 billion, the company said on 30 October. The acquisition is DoorDash's largest yet and marks a major push into the fast-growing US grocery delivery market as competition among app-based platforms intensifies.
The deal will give DoorDash greater scale as it expands beyond restaurant delivery into groceries and other retail categories. It will help the company compete with deep-pocketed retailers such as Walmart and Amazon, which have built vast store, warehouse and delivery networks, according to analysts.
“Grocery is one of the hardest things to get right online,” said Tony Xu, co-founder and chief executive of DoorDash. He added that Instacart had spent years learning to do that well for grocers. Instacart founder Apoorva Mehta said the two companies had explored a combination on and off for years.
The companies began talks about a potential deal over the summer, according to a source familiar with the matter. Instacart also held preliminary deal talks with Uber, but the ride-hailing company ultimately did not pursue a transaction, partly because it had announced a US$14.8 billion acquisition of German food delivery platform Delivery Hero a few months earlier, the source said.
“Restaurant delivery is maturing, and growth now lies in more frequent, higher-value orders: weekly grocery shops, convenience items, and retail,” said Martin Szumski, an analyst at Morningstar. Meanwhile, consolidation has gathered pace globally as companies navigate an environment of slowing orders, rising costs and tighter regulatory scrutiny of the treatment of gig workers.
DoorDash has offered Instacart shareholders US$65 per share, a premium of about 26 per cent to the stock's closing price on 22 October before reports of deal talks emerged. The consideration will be at least 75 per cent cash, with Instacart shareholders able to elect cash, DoorDash stock or a combination, the companies said. Shares of Instacart, formally known as Maplebear, were flat at US$58.35 in early trading.
The transaction is expected to close at the end of 2027 or the first half of 2028. Analysts at CFRA Research said the main risk was regulatory approval, noting that the long timeline suggested both sides expected an extended antitrust review. New York City's Department of Consumer and Worker Protection said on 29 October that a potential merger continued a “troubling trend” of corporate consolidation. DoorDash plans to retain Instacart's brand and app after the deal closes and combine the companies' membership programmes.