DoorDash Instacart Acquisition Puts $17B Bet on Grocery Delivery

The deal

DoorDash has agreed to buy Instacart in a cash-and-stock deal worth about $17 billion. The price works out to $65 per Instacart share, an 11% premium to Wednesday's close and roughly 26% above the stock's price on October 22, the last trading day before reports of a possible sale came out.1 The boards of both companies have approved the transaction.2 Instacart shareholders can take $65 in cash, 0.3372 DoorDash shares, or a mix of $48.75 in cash plus 0.0843 shares. Stock is capped at 25% of the total, and DoorDash plans to pay for the cash portion with debt and money it already has.7 The cash side is backed by a 364-day bridge loan from JPMorgan Chase, and DoorDash says it intends to keep its investment-grade credit standing.10

The companies expect the deal to close at the end of 2027 or in the first half of 2028.2 Before then it needs approval from Instacart shareholders, US antitrust clearance, and regulators in Canada and Israel. Holders of about 19% of Instacart's shares have already agreed to vote yes.7 Under the merger agreement, Instacart would owe a $650 million termination fee in certain cases, and DoorDash could owe $1.25 billion.17 This is DoorDash's largest acquisition so far.16

DoorDash released its third-quarter results early, alongside the announcement. Revenue was $4.62 billion, adjusted earnings were $1.06 per share, and orders rose 28% to 993 million.1 Reports differ on how investors reacted. One said DoorDash shares rose more than 6% in morning trading.1 Another, published later in the day, said they were up 3%.13 Instacart's stock barely moved, staying near $58.50 before the market opened, well below the $65 offer.6 That gap suggests investors see a real chance regulators slow or block the deal.17

Why grocery is the point

Coverage agrees that this is a grocery deal, even though DoorDash is best known for restaurant takeout. DoorDash CEO Tony Xu framed it that way, calling grocery one of the hardest things to sell online. Someone has to choose ripe produce, pick sensible substitutes and get frozen food home before it melts. Xu said Instacart has spent years learning to do that for grocers.2 PitchBook analyst Alex Frederick described the merger as a bet that the next stage of US delivery will be won on the weekly grocery order, not the takeout order.14

Each company brings what the other lacks. DoorDash already lists the full inventory of Kroger's roughly 2,700 US stores and has added Costco. Instacart covers nearly 100,000 stores across more than 2,200 retail partners. It also sells grocers the software behind their own websites, ads and AI tools.10 Frederick said DoorDash already handles about two-thirds of US food delivery volume, and that Instacart supplies the grocery software, retailer relationships and advertising tools DoorDash has been slow to build.14 Bloomberg reported that Xu recently called grocery DoorDash's fastest-growing business. TD Cowen analysts added that the deal could help DoorDash reach older customers, who use Instacart more for groceries.

For shoppers, the companies promise more stores and one membership. Instacart customers would get access to about 50,000 more stores, and DashPass and Instacart+ would be combined under a single fee.8 The companies say combining the two memberships could save customers about $100 million a year. That saving depends on the deal closing and the services actually being merged.17 DoorDash says it will keep Instacart's brand, app and enterprise technology, and the two companies will run separately until the deal closes.2

Instacart's long slide

The price says a lot about how much Instacart's position has weakened since the pandemic. It raised money at a $39 billion valuation in March 2021 and went public in September 2023 at $9.9 billion. DoorDash's offer is about 56% below that peak and about 72% above the IPO valuation.10 According to Consumer Edge, Instacart's share of US delivery-platform spending fell from 26% to 18% over five years, while DoorDash's rose from 44% to 59%.10 Consumer Edge said those trends partly reflect DoorDash and Uber Eats moving into grocery and other retail, which has blurred the lines between restaurant, grocery and general retail delivery.14

Instacart also had legal trouble. In December it agreed to pay $60 million to settle Federal Trade Commission claims of false advertising and unlawful subscription sign-ups.1 Its stock was still up about 25% this year before the deal, and one assessment is that Instacart took a good price before competition got tougher.2 It also had other suitors. Uber held talks but walked away, according to Bloomberg.2 DoorDash reportedly looked at buying Instacart for $40 billion to $50 billion in 2021 but dropped the idea over antitrust concerns.10

The real rivals: Walmart and Amazon

Both companies argue they are competing with big retailers, not with each other. Bloomberg's coverage said the deal was aimed at Walmart and Amazon.4 Amazon has scaled back its physical grocery stores but pushed harder online, using its fulfillment network to speed up delivery of household basics and fresh food.1 Both Amazon and Walmart have expanded same-day and next-day delivery, which threatens the on-demand model DoorDash and Instacart depend on.1 In their announcement, the companies pointed to large online retailers building their own fleets, warehouses, memberships and AI shopping assistants. They argued that smaller grocers on thin margins need a partner with similar reach.14 Frederick agrees with that view. He says Walmart and Amazon are the main competition in same-day grocery delivery and that a combined DoorDash-Instacart gives independent grocers a comparable partner.14

Other pressures add to the case for combining. Orders have cooled since the pandemic peak, costs have risen, and regulators are watching how gig workers are treated, all of which has driven a wave of deals in the industry.6 Reuters also suggested that a recent jump in gas prices, tied to the war in Iran, could give shoppers another reason to skip trips to the store.6 Consolidation is happening worldwide. DoorDash took over Wolt in an all-stock deal and bought Deliveroo in 2025. Uber has agreed to buy Delivery Hero for $14.8 billion. Prosus bought Just Eat Takeaway.com.10

How regulators might see it

The deal's outcome depends on how regulators define the market, and the market-share numbers vary a lot depending on that choice. Using Consumer Edge's figures for all delivery-platform spending, the two companies together would have about 77%.10 The American Economic Liberties Project, which is urging regulators to block the deal, says the combined company would control nearly 60% of third-party grocery delivery.18 Wedbush analysts said third-party platforms are still a small part of total grocery spending. They warned, though, that approval gets harder if regulators look narrowly at online grocery or treat grocers as the customers being served.1

The grocer-as-customer argument may be the most important one. Antitrust lawyer Ethan Litwin said it could be a problem for DoorDash to control Instacart's technology, because many grocers run their online stores on it.12 Writer Matt Stoller makes a similar point. Independent grocers and restaurants lack the scale of Kroger, Amazon or Walmart, so third-party delivery is a real market for them. They have already complained about handing over sensitive business information. DoorDash appears to see this coming. It has promised not to require grocery exclusivity and to let Instacart shoppers keep choosing their own orders and turn down jobs sent from DoorDash.7

The political climate is a problem for the companies. Reuters expects the FTC to review the deal, given its focus on affordability under the Trump administration and its history of scrutinizing delivery apps.19 A day before the announcement, the FTC opened an inquiry into personalized pricing and ordered DoorDash, Instacart, Uber, Target, Walmart and several airlines to explain how they use personal data to set prices.14 Earlier, a Consumer Reports and Groundwork Collaborative investigation found that Instacart's algorithmic pricing tests could produce price gaps of up to 23% on some products. Instacart ended the practice after the backlash.1419 New York City's consumer and worker protection department called the merger part of a "troubling trend" of corporate consolidation. The same agency recently reached a $131.5 million settlement with DoorDash over alleged underpayment of workers.9

The likely outcome

The business case is coherent. DoorDash gets grocery expertise that would take years to build, and Instacart gets a bigger delivery network. Advertising may matter even more than delivery. Selling digital shelf space to consumer brands earns far higher margins than delivering groceries, and the combined company would have a much larger ad business.14

The hard part will be approval. The long timeline, the $1.25 billion fee DoorDash would owe if the deal fails, and Instacart's discount to the offer price all suggest the companies and investors expect a long fight.17 The companies argue the competition is Walmart and Amazon. Critics argue that independent grocers have few options besides third-party platforms. Whichever argument regulators accept will likely decide the case. The no-exclusivity pledge may not be enough, and regulators could demand firm conditions on Instacart's grocer software in exchange for approval.