DoorDash is buying Instacart for $17 billion, creating a food delivery giant
DoorDash has agreed to acquire rival Instacart in a cash-and-stock deal valued at approximately $17 billion, bringing together two major players in the delivery industry.
The transaction would end Instacart’s run as an independent company. The grocery delivery platform went public in 2023 after experiencing rapid growth during the COVID-19 pandemic, but it has since faced intensifying competition from companies including Uber, Amazon and Walmart.
A stronger competitor in grocery delivery
Combining DoorDash and Instacart would create a larger delivery business with the scale to compete more directly against retail and technology giants. Amazon has continued expanding same-day grocery delivery, while Walmart offers delivery in as little as 30 minutes in some markets. Uber has also broadened its grocery services through new retail partnerships.
DoorDash said the combined company would give grocers and retailers access to its delivery network alongside Instacart’s grocery ordering and fulfillment technology.
Instacart has developed systems designed to handle the complexities of online grocery shopping, including selecting fresh produce, finding suitable replacements for unavailable products and transporting temperature-sensitive items. DoorDash, meanwhile, has established a broad logistics network used by restaurants and local retailers.
DoorDash continues moving beyond restaurant meals
The acquisition is part of DoorDash’s push to expand beyond its original restaurant delivery business. The company has added services such as restaurant reservations and delivery from retailers in categories including home improvement and beauty.
Buying Instacart would significantly increase DoorDash’s presence in grocery delivery while allowing it to offer more technology and fulfillment services to supermarkets and other merchants.
Under the terms of the proposed transaction, DoorDash would pay $65 per Instacart share. That represents a premium of roughly 25% compared with Instacart’s closing price on October 22, before reports emerged that the company was considering a sale.
Companies promote potential membership savings
DoorDash and Instacart say the merger could simplify subscriptions for customers who currently pay separately for DashPass and Instacart+. According to the companies, combining the membership programs could collectively save customers an estimated $100 million annually in fees.
However, the proposed acquisition is expected to face regulatory scrutiny. Critics argue that the combined business could control nearly 60% of the third-party grocery delivery market, potentially reducing competition and giving the company more influence over prices, merchants and worker compensation.
Consumer and antitrust advocates have called on regulators to examine how the merger could affect shoppers, delivery workers and small businesses that rely on the platforms.
Consolidation reshapes the delivery industry
The DoorDash-Instacart agreement is the latest example of consolidation across the delivery sector. Other major transactions have included the sale of Grubhub’s U.S. operations to Wonder, Uber’s acquisition of European delivery company Delivery Hero and Uber’s earlier purchase of Postmates.
The DoorDash and Instacart deal is expected to close in the coming months, subject to regulatory reviews, shareholder approval and other customary closing conditions.
