DoorDash agreed Thursday to acquire Instacart, the largest U.S. third-party grocery delivery platform, in a cash-and-stock deal valuing the company at about $17 billion.
The deal would join DoorDash's restaurant delivery business with the leading grocery delivery service. Research firm eMarketer estimates Instacart will hold about 65% of the U.S. third-party grocery delivery market this year.
"Grocery is one of the hardest things to get right online," said Tony Xu, co-founder and chief executive officer of DoorDash.
Xu said Instacart has spent years learning to do that well for grocers, while DoorDash has built a delivery network that local stores use every day.
"Over the last 14 years, Instacart has transformed online grocery," said Chris Rogers, Instacart's chief executive officer.
Deal terms
DoorDash will pay $65 for each share of Maplebear Inc., the company that does business as Instacart. The price is 26% above Instacart's closing price on Oct. 22, the last trading day before media reports of a possible deal.
Instacart shareholders can choose $65 in cash, 0.3372 DoorDash shares, or $48.75 in cash plus 0.0843 DoorDash shares for each share they own. At least 75% of the total payment will be cash, and DoorDash stock is capped at 25%.
DoorDash will fund the cash portion with cash on hand and new debt. JPMorgan Chase Bank has committed to a 364-day bridge loan, and the deal has no financing condition. DoorDash said it aims to keep its investment-grade credit ratings.
Instacart's board unanimously approved the agreement. Shareholders who own about 19% of Instacart's stock have agreed to vote for it.
The deal needs approval from Instacart shareholders, clearance under the U.S. Hart-Scott-Rodino antitrust review and approvals in other countries, including Canada and Israel.
If the deal collapses under certain conditions, Instacart would pay DoorDash a $650 million termination fee, and DoorDash would owe Instacart $1.25 billion, Reuters reported, citing a regulatory filing.
What the companies plan
DoorDash expects to keep Instacart's brand, app and enterprise technology products. The two companies will operate separately until the deal closes.
The companies said Instacart customers could shop at more than 50,000 more stores on top of the nearly 100,000 on Instacart today. DashPass and Instacart+ members would pay one membership fee instead of two, which the companies estimate would save consumers about $100 million a year.
DoorDash also stated that grocers will not have to use it exclusively and can work with any delivery platform. Instacart shoppers will keep their flexible schedules and can choose whether to accept DoorDash orders.
Regulatory risk
CFRA Research said regulatory approval is the main risk to the deal. Its analysts said the long closing timeline points to an extended antitrust review.
New York City's Department of Consumer and Worker Protection said a merger would continue a trend of corporate consolidation that it called troubling, according to Reuters.
Antitrust concerns helped end earlier talks between the two companies. In 2021, DoorDash weighed buying Instacart for $40 billion to $50 billion, Reuters reported at the time.
Instacart went public in 2023 at a valuation of about $10 billion. Last week, The Information reported that Uber had also considered buying Instacart, and later updated its story to say those talks had stopped.
Uber Eats has supplied restaurant delivery on Instacart through a partnership since 2024. A combined DoorDash and Instacart would leave Uber Eats out of that arrangement, Fast Company reported.
DoorDash's buying spree
Instacart would be DoorDash's largest acquisition. Over the past 18 months, the company also bought Deliveroo for $3.9 billion, SevenRooms for $1.2 billion, Grubhub's campus dining business for $300 million, and Symbiosys for $175 million.
DoorDash shares rose nearly 6% in early trading on Thursday after the company also reported better-than-expected quarterly revenue. Instacart shares were flat at $58.35.
