DoorDash to Swallow Instacart for $17 Billion if Antitrust Regulators Agree

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Two delivery services are about to become one, if Washington plays along. DoorDash has just announced plans to acquire its rival Instacart for about $17 billion. The largest U.S. food delivery service would also become the dominant player in grocery delivery. The deal will take time, though: It is not expected to close until late 2027 or the first half of 2028.

The Key Terms

According to DoorDash’s announcement, the company will pay $65 per Instacart share. That is a 26 percent premium to the closing price before the first reports of the talks emerged. The most important points:

• Payment: At least 75 percent in cash, the rest in DoorDash shares. The deal will be financed with cash on hand and debt, with JPMorgan providing a bridge loan.
• Brand: Instacart is to remain a separate brand with its own app, as is its technology business for retailers.
• Memberships: The DashPass and Instacart+ memberships are to be combined, which DoorDash says will save members about $100 million a year.
• Retailers: Grocers will still be able to work with any platform, with no exclusivity agreements.

“Grocery is one of the hardest things to get right online,” said Tony Xu, DoorDash’s co-founder and chief executive. Instacart’s chief executive, Chris Rogers, said that joining forces with DoorDash would allow Instacart to do even more.

Why DoorDash Wants Instacart

The two companies play in different leagues. DoorDash is worth about $73 billion on the stock market, Instacart about $14 billion.

For Instacart, the purchase price is a sobering figure. The company reached its peak valuation before it went public: In 2021, private investors valued Instacart at $39 billion in a funding round. When it went public in the fall of 2023, the shares were priced at $30, valuing the company at about $10 billion. The stock has since recovered, but Instacart has never been worth more than about $14 billion on the stock market. The $17 billion DoorDash is now offering is less than half of its former peak valuation.

DoorDash operates in 40 countries, handled more than three billion orders last year and relies on about nine million independent couriers. Instacart processed 338 million orders and works with 600,000 so-called shoppers.

For DoorDash, Instacart is above all a ticket into the grocery business. Instacart brings partnerships with supermarket chains, an advertising business and extensive experience in shopping on behalf of customers. In return, Instacart customers gain access to more than 50,000 additional stores.

The Antitrust Hurdle

Whether the deal goes through will ultimately be decided by competition authorities. In addition to the United States, Canada and Israel must also approve it. The two companies already discussed a merger in 2021, but those talks fell apart over antitrust concerns.

The market shares show why. According to data from Consumer Edge reported by NBC News, DoorDash recently accounted for 59 percent of spending on U.S. delivery platforms and Instacart for 18 percent. Together, the two would control more than three-quarters of the market. Uber Eats sits just under 20 percent.

DoorDash Points to Amazon and Walmart

DoorDash is likely to argue to regulators that the relevant market is much larger. In groceries, the delivery services compete with retailers such as Walmart and Amazon, which run their own delivery offerings. Walmart currently also uses Instacart for deliveries, and it is unclear what will happen to that partnership. Then there is Uber, the No. 2 in the United States with Uber Eats, which is also making major acquisitions abroad. In Europe, Uber is currently taking over Delivery Hero, while DoorDash itself bought Deliveroo last year.