DoorDash agrees to buy Instacart for about $17 billion, at $65 a share
Serguey Asael Shinder1 min readInstacart's grocery software is about to belong to the largest US food delivery app. DoorDash and Maplebear, the company that trades as Instacart, announced a definitive agreement on 29 October under which DoorDash will pay $65.00 for each Instacart share, an equity value of about $17 billion.
According to the announcement, the price is a 26% premium to Instacart's closing price on 22 October. At least 75% of the total consideration will be paid in cash; Instacart shareholders can elect cash, DoorDash stock or a mix, with proration so that stock does not exceed 25% of the total. Instacart's board approved the agreement unanimously.
The companies frame the deal as a way for local grocers and retailers to compete with the largest online sellers. The combined company would offer DoorDash's delivery network together with Instacart's grocery fulfilment technology, both inside the two apps and on stores' own websites, along with the advertising and AI tools each has built. Grocers could run their own storefronts and retail media networks on Instacart's software and add capacity through DoorDash's DashMart Fulfillment Services. Both consumer apps are described as continuing, with customers choosing a store and the store making the sale.
DoorDash co-founder and CEO Tony Xu called grocery one of the hardest things to get right online, citing the work of picking ripe produce and choosing substitutes.
What it means
For developers and retailers that build on Instacart's storefront and fulfilment platform, the question is what changes when that platform is owned by a delivery network with its own retail ambitions. Nothing in the announcement says. The transaction is subject to regulatory approval and Instacart shareholder approval, and a combination of the two largest US grocery delivery services can expect close antitrust review.