Updated version 2 - DoorDash acquires US competitor Instacart for $17 billions, betting on fresh grocery delivery business

The full article has been supplemented with details.

Reuters, October 29 - DoorDash DASH.O said on Thursday that it will acquire Instacart CART.O at a transaction valuation of about $17 billion, a move that will accelerate its entry into the fast-growing U.S. grocery delivery market as competition between app-based platforms intensifies.

With order volumes falling from their pandemic peaks, rising costs, and increased regulatory scrutiny over gig economy workers’ rights, competition in the industry has intensified, sparking a wave of mergers and acquisitions across the sector (link).

Meanwhile, as their core restaurant delivery businesses mature, growth-seeking delivery companies are expanding into groceries, convenience stores, and other retail segments.

“Groceries are one of the hardest categories to do well online,” DoorDash co-founder and CEO Tony Xu said, adding that Instacart has spent years learning how to provide quality service to grocery retailers.

As consumers increasingly value convenience, online grocery deliveries are gaining popularity; and recent gasoline price surges due to supply disruptions from the Iran war could give consumers yet another reason to avoid visiting physical stores.

The offer DoorDash made to Instacart shareholders is $65 per share, representing a premium of about 26% to the closing price on October 22, before news of the talks emerged.

The companies said that at least 75% of the deal’s consideration will be in cash, and Instacart shareholders may choose between cash, DoorDash stock, or a combination of both.

Instacart (formerly Maplebear) shares were flat at $58.50 in pre-market trading. The stock had hit a record high of $62 on Monday.

DoorDash shares soared nearly 7% after quarterly revenue exceeded expectations. As of the last close, the company's shares had fallen about 25% year-to-date.

The deal is expected to close by the end of 2027 or in the first half of 2028.

The deal could face scrutiny over its impact on competition. On Wednesday, New York City’s Department of Consumer and Worker Protection (DCWP) said the potential merger continues a “troubling trend” of corporate consolidation.

However, DoorDash pledged on Thursday that local grocers will still be able to work with whichever delivery platform they choose.

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

(To assist non-English speakers, Reuters automatically translates its reports into several languages. Because automated translations may be inaccurate or lack necessary context, Reuters makes no guarantee as to the accuracy of the translated text and provides the automated translation for convenience only. Reuters accepts no liability for any damages or losses caused by the use of the automated translation service.)