DoorDash said on Thursday it has agreed to acquire Instacart in a transaction valued at about $17 billion, intensifying competition in the U.S. grocery delivery market as app-based platforms push to expand beyond restaurant takeout.
The companies stated that Instacart shareholders will be offered $65 per share held, a figure that represents about a 26% premium to the stock's closing price on October 22 - the trading day before media reports of talks surfaced. The deal consideration will be no less than 75% cash, and shareholders will have the option to elect cash, DoorDash stock, or a mix of both.
Across premarket trading, shares of Instacart - which is formally incorporated as Maplebear - were flat at $58.50. The shares had reached an intraday record of $62 on the prior Monday.
DoorDash's chief executive and co-founder, Tony Xu, highlighted the operational difficulty of fulfilling online grocery orders and pointed to Instacart's multi-year experience working with grocers. In his remarks Xu said:
"Grocery is one of the hardest things to get right online,"
He added that Instacart had spent years learning to execute that service for grocery merchants.
The announcement arrives amid a broader industry backdrop in which platforms have been adjusting to a pullback from the pandemic-era peak in orders, while facing rising operating costs and heightened regulatory scrutiny over how gig workers are treated. Those dynamics have helped spur a wave of transactions as firms seek scale and new revenue sources.
Delivery companies are increasingly branching into grocery, convenience and other retail categories as their core restaurant-delivery businesses mature. Separately, online grocery has attracted more consumer adoption based on convenience, and a recent surge in gasoline prices related to disruptions from the war in Iran was cited by the companies as an additional factor that may incentivize shoppers to forgo store trips.
Market reaction to the tie-up included a near 7% intraday jump in DoorDash shares after the company also reported quarterly revenue that exceeded analyst expectations. Despite that pop, the stock has declined roughly 25% year-to-date through the most recent close.
The parties expect the transaction to be completed by the end of 2027 or in the first half of 2028.
Regulatory and competitive scrutiny of the transaction is anticipated. New York City's Department of Consumer and Worker Protection stated that a potential merger was part of a "troubling trend" of corporate consolidation. DoorDash responded by assuring that local grocers would remain free to contract with any delivery provider they choose.
The deal represents a significant consolidation in a segment of the delivery market that is adjusting to slower order growth, higher costs and regulatory risks, while seeking avenues for expansion into adjacent retail categories.