DoorDash has reached an agreement to acquire Instacart in a deal valued at approximately $17 billion, marking its largest acquisition to date as the company seeks to strengthen its position in the U.S. grocery delivery market.
The transaction will give DoorDash greater scale as it expands beyond restaurant deliveries into groceries and other retail categories, positioning it to compete more directly with retail giants such as Walmart and Amazon, which have extensive store, warehouse, and delivery networks.
Under the terms, DoorDash will offer Instacart shareholders $65 per share, a premium of about 26% to the stock's closing price on October 22, before reports of deal discussions emerged. At least 75% of the consideration will be in cash, with shareholders able to elect cash, DoorDash stock, or a combination of both, the companies said.
DoorDash shares rose more than 6% on Monday following the announcement, also supported by better-than-expected quarterly revenue. However, the stock has fallen about 18% so far this year. Instacart shares slipped nearly 1% after reaching a record high of $62 on Monday.
Grocery delivery becomes a key growth driver
The acquisition comes as delivery platforms seek new sources of growth amid intensifying competition and a maturing restaurant delivery market. "Restaurant delivery is maturing, and growth now lies in more frequent, higher-value orders: weekly grocery shops, convenience items, and retail," said Martin Szumski, an analyst at Morningstar, as reported by Reuters.
Instacart has built relationships with grocers and developed technology and logistics capabilities for online grocery shopping. DoorDash believes those capabilities will help it expand in a category where established retailers have significant advantages in infrastructure and fulfillment. "Grocery is one of the hardest things to get right online," said Tony Xu, co-founder and CEO of DoorDash, adding that Instacart has spent years learning to do that well for grocers.
Instacart founder Apoorva Mehta said the two companies had explored a combination on and off for years. Online grocery delivery has gained traction as consumers increasingly prioritize convenience. A recent surge in gasoline prices linked to disruptions from the war in Iran could also encourage shoppers to avoid trips to physical stores.
Regulatory scrutiny remains a key hurdle
The deal comes amid a broader wave of consolidation in the delivery sector, as slowing order growth, rising costs, and tighter scrutiny of gig-worker treatment put pressure on companies. However, regulatory approval could prove a significant obstacle. Analysts at CFRA Research said in a note that the lengthy timeline for closing suggested both companies expected an extended antitrust review. "The main risk is regulatory approval," the analysts said. "The current regulatory backdrop is generally favorable, but the long closing window leaves the deal exposed to changes in policy," they added.
Under President Donald Trump, the Department of Justice has allowed several major transactions to proceed, encouraging companies to pursue large deals amid a more favorable regulatory environment. Asked about the timing of the acquisition during an investor call, DoorDash CEO Tony Xu said the company's core business was performing well. "We felt like we had the space to do something offensive," he added.
The deal could also face opposition from grocery retailers and gig workers concerned that the merger would eliminate a major competitor in the market. New York City's Department of Consumer and Worker Protection said on Wednesday that the potential merger continued a "troubling trend" of corporate consolidation.
The transaction is expected to close at the end of 2027 or during the first half of 2028, leaving the companies exposed to changes in the regulatory environment before completion.
Brands and membership programmes to be combined
DoorDash plans to retain Instacart's brand and app after the acquisition and combine the companies' membership programmes. It has also pledged not to require grocery partners to use its delivery services exclusively. The deal includes termination fees for both sides. Instacart would be required to pay DoorDash $650 million if it terminates the agreement, while DoorDash would owe $1.25 billion if the transaction is ended under certain circumstances, according to a regulatory filing.
This article is for informational purposes only and does not constitute financial advice.
