DoorDash has agreed to buy grocery delivery rival Instacart in a cash-and-stock deal valuing the company at about $17bn.
The acquisition would bring two of the biggest US delivery platforms under one roof, expanding DoorDash’s reach in grocery shopping.
The companies announced the deal on Thursday. Instacart shareholders can choose $65 in cash per share, 0.3372 DoorDash shares, or a combination of the two. The offer represents a 26% premium to Instacart’s closing price on 22 October, the last trading day before reports of the negotiations emerged.
At least 75% of the purchase price will be paid in cash, funded through DoorDash’s existing cash reserves and new borrowing. JPMorgan has agreed to provide a short-term bridge loan.
DoorDash plans to retain the Instacart name and app, along with the software it sells to supermarkets that want to run their own online stores. The deal would also give Instacart customers access to more than 50,000 additional stores through DoorDash.
The companies plan to bring their subscription programmes closer together, too. DashPass and Instacart+ members would pay a single fee rather than maintaining two separate subscriptions. DoorDash estimates that this could save members around $100m a year.
“Grocery is one of the hardest things to get right online,” said DoorDash co-founder and chief executive Tony Xu.
Instacart chief executive Chris Rogers said the company had spent 14 years helping retailers of all sizes compete online. The combination would allow it to reach more shoppers, he added.
The deal is not expected to close until late 2027 or the first half of 2028. It requires approval from Instacart shareholders and competition regulators in the US, Canada and Israel. Shareholders representing around 19% of Instacart’s shares have already agreed to vote in favour.
This is not the first time DoorDash has considered buying its rival. The companies held talks in 2021 when Instacart was valued at between $40bn and $50bn, but negotiations ended over antitrust concerns.
The latest round of talks became public last week. The Information first reported that Instacart was exploring a sale and had spoken to both DoorDash and Uber.
Instacart also reported its quarterly results on Thursday. Revenue rose 17% year-on-year to $1.1bn, while the total value of orders placed through its platform increased 15% to $10.5bn. Net income reached $147m.
The company cancelled its earnings call and withdrew its financial guidance because of the pending acquisition.