In this article
DoorDash has agreed to buy Instacart in a deal valued at about $17bn, bringing together the largest US restaurant delivery app and the leading grocery delivery service.
The companies announced the agreement on Thursday, October 29, days after the Wall Street Journal reported that talks were at an advanced stage.
The terms
DoorDash will pay $65 for each Instacart share, a 26 percent premium to Instacart's closing price on October 22, the last trading day before reports of the talks emerged.
At least 75 percent of the total will be paid in cash. Instacart shareholders can choose cash, DoorDash shares or a mix, subject to limits that keep the stock portion at no more than 25 percent overall. DoorDash plans to fund the cash with money on hand and new borrowing. Instacart's board approved the deal unanimously.
A long road to completion
The deal is not expected to close until the end of 2027 or the first half of 2028. It needs approval from Instacart shareholders and from regulators, who are likely to examine closely whether combining the two companies would reduce competition for shoppers, retailers and delivery workers.
The two companies previously discussed a deal in 2021, when Instacart was valued far higher, but those talks collapsed partly over regulatory concerns. Until the deal closes, they will continue to operate separately.
What changes for customers
DoorDash says it intends to keep the Instacart brand and app. Reports say its DashPass membership and Instacart+ will eventually be merged into a single subscription, though details of existing perks, including benefits linked to credit cards, have not been settled.
Why DoorDash wants Instacart
DoorDash has been expanding beyond restaurants into groceries, convenience stores and retail. Instacart brings deep relationships with supermarket chains and technology that grocers use to run their own online stores and advertising.
DoorDash says the combined company would let grocers use Instacart's software to build their own online ordering and advertising businesses, while tapping DoorDash's delivery network to fulfil orders. Advertising, in particular, has become a fast-growing and profitable business for delivery platforms, which can sell brands placement in front of shoppers at the moment they buy.
Sources and references
- 1.DoorDash press release (Form 8-K exhibit) — DoorDash via SECPrimary source
- 2.DoorDash to acquire Instacart for $17B — TechCrunch
- 3.DoorDash to acquire Instacart in deal valued around $17B — ABC News
- 4.DoorDash is acquiring Instacart. For you, that means one less subscription, eventually. — Yahoo Finance
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