Updated version 1 - DoorDash acquires US rival Instacart for $17 billion, betting on the fresh grocery delivery business

Details have been added in paragraph 2, and a comment from the DoorDash CEO has been included in paragraph 4.

Reuters, October 29 - DoorDash (DASH.O) said on Thursday it would acquire Instacart (CART.O) at a deal valuation of around $17 billion, as competition among app-based platforms intensifies and DoorDash steps up efforts to expand in the fast-growing U.S. grocery delivery market.

DoorDash’s offer to Instacart shareholders is $65 per share, representing a premium of about 26% over the closing price on October 22, before news of the acquisition talks first surfaced.

As the restaurant delivery business matures, delivery companies are seeking growth by expanding into grocery and retail segments.

“Grocery delivery is one of the most challenging sectors to execute well in online business,” DoorDash co-founder and CEO Tony Xu said, adding that Instacart has long been working to provide quality services for grocery retailers.

As budget-conscious consumers increasingly favor the convenience of online delivery, especially as gas prices have reached record highs due to turmoil related to the Iran war, the grocery delivery business has been gaining popularity.

Meanwhile, as order volumes have slowed from pandemic peaks, competition has intensified in the market; combined with rising cost pressures and increased regulatory scrutiny over the treatment of gig economy workers, these factors are driving a wave of merger and acquisition activity in the industry.

This includes Just Eat Takeaway’s $7.3 billion acquisition of Grubhub (link), DoorDash’s planned acquisition of Wolt and the UK’s Deliveroo in 2025, and Uber’s $15 billion purchase of Delivery Hero earlier this year (link) and Postmates in 2020 (link).

The deal between DoorDash and Instacart is expected to be completed by the end of 2027 or in the first half of 2028.

https://www.reuters.com/graphics/INSTACART-MA/DOORDASH/zjpqlgxmmvx/chart.png

Instacart stated in a regulatory filing submitted on Monday that it will gradually phase out its Caper Cart smart shopping cart business by the end of the second quarter of 2027, with related pre-tax expenses expected to be between $55 million and $80 million.

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