DoorDash Will Swallow Rival Instacart for $17 Billion in a Deal That May Not Clear Antitrust Review Until 2028

The company that already controls most of America's restaurant takeout orders is buying the country's dominant grocery delivery app. DoorDash agreed on Thursday to acquire Instacart for about $17 billion, which would give one company a large share of the business of bringing dinner and groceries to Americans' doors.

It may be a long time before that happens. The companies don't expect to close until the end of 2027 or the first half of 2028, and they will operate separately until then.

The deal is DoorDash's largest takeover, above the roughly $8 billion Wolt deal and its Deliveroo acquisition. For Instacart, it caps a long fall. Private investors valued the company at $39 billion during the pandemic grocery boom. It went public in 2023, and its market cap had recently been around $14 billion, with larger rivals moving onto its turf.

The terms

DoorDash is paying $65 a share, a 26% premium to Instacart's close on October 22, the last trading day before reports of a deal. At least 75% will be paid in cash. Holders can elect cash, DoorDash stock or a mix, with stock capped at 25%.

The cash will come from money on hand and debt, backed by a 364-day bridge loan commitment from JPMorgan Chase, and there is no financing condition. Instacart's board voted unanimously, and holders of about 19% of the shares have agreed to vote yes.

The sale process moved fast. Days ago, Instacart had hired a bank and held early talks with buyers including DoorDash, while Uber looked and walked away.

DoorDash shares jumped more than 7% premarket on Thursday. Instacart moved far less.

The pitch and the catch

DoorDash is framing this as a rescue mission for local grocers. "The biggest online retailers and grocers are racing ahead, building their own delivery fleets, warehouses, membership programs, and AI shopping assistants," the companies said. "A grocer or retailer running on thin margins cannot build all of that alone."

CEO Tony Xu made the case in avocados. "Grocery is one of the hardest things to get right online," he said. "Someone has to pick a ripe avocado, find a substitute you'd choose yourself, and get the ice cream to you before it melts." He also said the deal will "enable more affordable prices." Instacart CEO Chris Rogers said that "joining forces with DoorDash allows us to do even more."

The promises cover almost everyone involved. Instacart keeps its brand, enterprise technology and app. Grocers won't be required to sign exclusivity. Instacart customers would get more than 50,000 additional stores on top of close to 100,000, DashPass and Instacart+ members would pay one fee instead of two, and Dashers and Shoppers would get more ways to earn.

The catch is the approvals. The deal needs an Instacart stockholder vote, the end of the Hart-Scott-Rodino antitrust waiting period and other regulatory approvals, including in Canada and Israel.

Two businesses still growing

Both companies are still growing. DoorDash handled 993 million orders in the third quarter, up 28%, as customers spent nearly $34 billion, and revenue reached $4.6 billion.

Instacart's gross transaction value rose 15% and its revenue climbed 17% to $1.095 billion, with net income of $147 million. It also suspended guidance, withdrew its long-term targets and canceled its November 5 earnings call.

Together they would reach deep into American retail. Instacart partners with more than 2,200 retail banners and nearly 100,000 stores, and DoorDash already serves 44 of the top 100 US retailers.

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