Key Takeaways
- • DoorDash agreed to acquire rival Instacart (Maplebear) in a deal valued at about $17 billion, the largest transaction in DoorDash's history, according to Reuters.
- • DoorDash offered $65 per Instacart share, a premium of about 26% to the October 22 closing price before reports of deal talks emerged, with at least 75% of consideration in cash.
- • The transaction is expected to close at the end of 2027 or in the first half of 2028, with analysts at CFRA Research flagging regulatory approval as the main risk.
- • Termination fees are set at $650 million payable by Instacart and $1.25 billion payable by DoorDash under certain circumstances, per a regulatory filing.
- • The deal positions DoorDash to compete more directly with Walmart and Amazon in the fast-growing US online grocery delivery market.
Summary
DoorDash said on Thursday it would buy Instacart in a deal valued at about $17 billion, extending its push into US grocery delivery as competition among app-based platforms intensifies. Reuters reported that the transaction is DoorDash's largest to date and is intended to give the company greater scale as it expands beyond restaurant delivery into groceries and other retail categories. The move is aimed at challenging deep-pocketed retailers such as Walmart and Amazon, which have built extensive store, warehouse and delivery networks.
Tony Xu, co-founder and CEO of DoorDash, said that "grocery is one of the hardest things to get right online," adding that Instacart has spent years learning to serve grocers well. Instacart founder Apoorva Mehta said the two companies had explored a combination on and off for years. According to a source familiar with the matter, talks began over the summer, and in early September Instacart's CEO signaled to DoorDash's CEO that the company was exploring strategic alternatives. Instacart had also held preliminary talks with Uber, which did not pursue a transaction, in part because it had recently announced a $14.8 billion acquisition of German food delivery platform Delivery Hero.
DoorDash has offered Instacart shareholders $65 per share, a premium of about 26% to the stock's October 22 closing price. The consideration will be at least 75% cash, with shareholders able to elect cash, DoorDash stock, or a combination. Instacart, formally known as Maplebear, traded flat at $58.35 in early trading after hitting a record high of $62 earlier in the week. DoorDash shares rose nearly 6% after the company reported better-than-expected quarterly revenue, though they have declined about 25% year to date through the prior close.
The transaction is expected to close at the end of 2027 or in the first half of 2028. CFRA Research analysts said "the main risk is regulatory approval," noting the long closing window suggests both sides anticipate an extended antitrust review. New York City's Department of Consumer and Worker Protection said a potential merger continued a "troubling trend" of corporate consolidation. DoorDash plans to retain Instacart's brand and app and combine the companies' membership programs, while pledging not to require grocers to use its delivery services exclusively. Per a regulatory filing, Instacart would owe DoorDash a $650 million termination fee, and DoorDash would owe $1.25 billion if the deal is terminated under certain circumstances.
Tony Xu, co-founder and CEO of DoorDash, said that "grocery is one of the hardest things to get right online," adding that Instacart has spent years learning to serve grocers well. Instacart founder Apoorva Mehta said the two companies had explored a combination on and off for years. According to a source familiar with the matter, talks began over the summer, and in early September Instacart's CEO signaled to DoorDash's CEO that the company was exploring strategic alternatives. Instacart had also held preliminary talks with Uber, which did not pursue a transaction, in part because it had recently announced a $14.8 billion acquisition of German food delivery platform Delivery Hero.
DoorDash has offered Instacart shareholders $65 per share, a premium of about 26% to the stock's October 22 closing price. The consideration will be at least 75% cash, with shareholders able to elect cash, DoorDash stock, or a combination. Instacart, formally known as Maplebear, traded flat at $58.35 in early trading after hitting a record high of $62 earlier in the week. DoorDash shares rose nearly 6% after the company reported better-than-expected quarterly revenue, though they have declined about 25% year to date through the prior close.
The transaction is expected to close at the end of 2027 or in the first half of 2028. CFRA Research analysts said "the main risk is regulatory approval," noting the long closing window suggests both sides anticipate an extended antitrust review. New York City's Department of Consumer and Worker Protection said a potential merger continued a "troubling trend" of corporate consolidation. DoorDash plans to retain Instacart's brand and app and combine the companies' membership programs, while pledging not to require grocers to use its delivery services exclusively. Per a regulatory filing, Instacart would owe DoorDash a $650 million termination fee, and DoorDash would owe $1.25 billion if the deal is terminated under certain circumstances.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.