A $65 a share offer for the grocery app
DoorDash agreed to buy Instacart for about $17bn, the two companies announced, creating a delivery group that handles restaurant meals, groceries and retail goods on the same network. DoorDash will pay $65.00 a share in cash and stock, a 26% premium to Instacart's closing price on October 22, the last trading day before reports of a possible deal. Instacart's board approved the transaction unanimously.
DoorDash shares rose more than 9% in pre-market trading after the announcement. The deal still needs regulatory approval and is expected to close next year.
What customers get, and what retailers lose
Instacart shoppers will gain access to about 50,000 more stores on top of the nearly 100,000 already listed on its platform, the companies said. DashPass and Instacart+ will merge into one membership fee instead of two. DoorDash said it will keep the Instacart brand and its technology, and both apps will keep running separately until the transaction closes.
The combined business will offer grocers DoorDash's courier network plus Instacart's grocery picking and fulfilment software, including tools that retailers use on their own websites. Instacart chief executive Chris Rogers said joining DoorDash would let the company do more for retailers of every size.
Consolidation in a low-margin industry
The purchase is the latest step in a wave of consolidation. DoorDash bought Britain's Deliveroo last year. Uber owns Postmates and Delivery Hero. Grocery delivery has always been a thin-margin business, and scale helps spread the cost of couriers, refrigerated bags, dark stores and route planning software.
For warehouse and fulfilment operators, mergers like this usually mean fewer, larger distribution centres and more automation at the loading dock. Sorting lines, transfer tables and conveyor junctions have to move more volume per hour, and cartons arrive in more shapes than before. Equipment that lets a worker redirect a heavy tote without lifting it becomes a bottleneck fix rather than a luxury.
Analysts expect regulators to look closely at market share in dense urban areas, where the two apps overlap most. Consumer groups have asked whether one membership fee will really hold once the merger closes, or whether delivery fees will rise after the overlap is removed.
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