DoorDash to Buy Instacart for $17 Billion in Grocery Delivery Consolidation
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DoorDash said on Friday it has agreed to acquire Instacart in a transaction valued at about $17 billion, combining the two largest grocery delivery services in the United States. DoorDash will pay $65 a share, a 26 per cent premium to Instacart’s closing price of $51.57 on October 22, with at least 75 per cent of the consideration in cash. The companies said they expect the deal to close in about a year, subject to regulatory approval.
Instacart will keep its brand, app and technology, and the two platforms will operate independently until closing. Afterward, Instacart’s roughly 600,000 shoppers would gain access to about 150,000 stores, up from 100,000, and customers would gain access to the roughly 50,000 additional stores DoorDash covers for grocery. Instacart processed 338 million orders last year; DoorDash has delivered more than three billion orders across 40 countries with about nine million workers.
The transaction reorders a market DoorDash has come to dominate. According to the research firm Consumer Edge, Instacart accounted for 26 per cent of spending on United States delivery platforms five years ago; that share has fallen to 18 per cent, while DoorDash’s rose to 59 per cent from 44 per cent. Uber Eats held steady at just under 20 per cent. Instacart’s market value stood at $14 billion before the announcement; DoorDash’s at $73 billion.
DoorDash chief executive Tony Xu said grocery is “one of the hardest things to get right online.” “Someone has to pick a ripe avocado, find a substitute you’d choose yourself, and get the ice cream to you before it melts,” Mr. Xu said. Instacart chief executive Chris Rogers said the service had “transformed online grocery by helping retailers of all sizes compete and grow” over 14 years, and that “joining forces with DoorDash allows us to do even more.”
City regulators and analysts flagged the market’s concentration. New York City’s commission on consumer and worker protections, which last month reached a $131.5 million settlement with DoorDash over allegations of underpaying workers, said in a statement that the “proposed merger continues a troubling trend of mega-corporations consolidating.” Morningstar analyst Martin Szumski told Reuters that the growth area in food delivery was shifting. The consequences for existing partnerships were unclear: Instacart offers delivery from Walmart, while DoorDash stopped providing Walmart delivery in 2022.
The deal is DoorDash’s largest acquisition to date. It follows rapid expansion of DoorDash’s grocery business, including a partnership that now lists the full inventory of all 2,700 United States Kroger stores and the addition of Costco delivery last month. Regulators in Washington and the states will weigh the merger before the companies expect closing, by the end of 2027 or the first half of 2028.