DoorDash to Acquire Instacart in $17 Billion Deal to Counter Amazon and Walmart

Key points

• DoorDash will pay $65 per Instacart share, a 26% premium over the Oct. 22 closing price, in a deal valued at $17 billion.
• The transaction is at least 75% cash, with Instacart stockholders able to elect cash, DoorDash stock, or a combination.
• Instacart's board unanimously approved the deal, which is expected to be finalized by the end of 2027 or the first half of 2028.
• DoorDash plans to keep the Instacart brand, app, and technology, while allowing its 600,000 independent contractor shoppers to continue fulfilling orders.
• The combined entity will offer customers access to 150,000 stores and consolidate DashPass and Instacart+ memberships into a single fee.

Background

Previous talks between the two companies in 2021 collapsed due to antitrust concerns, but current market conditions and a lower valuation have made a deal more feasible. DoorDash began delivering groceries in 2020, expanding its presence from restaurants to retail, while Instacart has seen its market share decline from 26% to 18% over the past five years as DoorDash's share grew from 44% to 59%.

How outlets are covering it

Wedbush analyst Ygal Arounian views the combination as a critical competitive differentiation against Walmart and Amazon, which hold significant shares of the online grocery market. Morningstar analyst Martin Szumski notes that restaurant delivery is maturing, and growth now lies in higher-value grocery and retail orders. However, New York City's commission on consumer and worker protections criticized the merger as a troubling trend of mega-corporations consolidating, emphasizing its commitment to enforcing delivery workers' rights. Instacart founder Apoorva Mehta stated that the industrial logic of combining the two has been clear for years, as it addresses the full spectrum of customer needs.

Why it matters

The acquisition creates a dominant player in the US delivery market, capable of challenging Amazon and Walmart in online grocery. It consolidates the market, potentially reducing competition but offering customers more store options and lower subscription costs. The deal also raises antitrust concerns and highlights the ongoing consolidation of the gig economy and delivery services.

What to watch

The deal is expected to be finalized by the end of 2027 or early 2028, pending approval from Instacart shareholders and government regulators. DoorDash and Instacart will continue to operate as independent companies until the deal is concluded. The combined entity will likely face scrutiny from antitrust regulators and may need to address concerns regarding worker compensation and market dominance.