DoorDash to Buy Instacart for $17bn

DoorDash has agreed to buy Instacart for $65 a share, valuing the grocery-delivery company’s equity at about $17bn. The two companies announced the deal on 29 October, and Instacart’s board approved it unanimously.

It will take a long time to find out whether it happens. The companies expect the deal to close “in the end of 2027 or the first half of 2028”, subject to a vote by Instacart shareholders, the expiry of the US antitrust waiting period under the Hart-Scott-Rodino Act and “other regulatory approvals, including in Canada and Israel”. Until then the two will run as separate, independent companies.

The terms

The $65 price is a 26% premium to Instacart’s closing price on 22 October, “the last trading day before media reports about a possible transaction”. At least 75% of the total will be paid in cash, and DoorDash stock is capped at 25%. Instacart shareholders can choose, for each share, $65 in cash, 0.3372 DoorDash shares, or $48.75 in cash plus 0.0843 DoorDash shares. If too many ask for stock, it will be rationed.

That means DoorDash needs at least roughly $12.75bn in cash, by TSN’s calculation from the release. It plans to pay with cash on hand and new debt, and has a commitment from JPMorgan Chase for a 364-day senior unsecured bridge loan. The deal has no financing condition, and DoorDash says it is aiming for a capital structure that keeps investment-grade credit ratings. DoorDash reported $5.05bn of cash and cash equivalents at the end of September, plus $929m of short-term investments, in its third-quarter results.

Holders of about 19% of Instacart’s shares have already agreed to vote in favour.

What DoorDash says it gets

Both companies reported results on the same morning. DoorDash’s quarterly revenue rose 34% to $4.6bn, with net income of $466m. Instacart’s revenue rose 17% to $1.1bn, on $10.5bn of gross transaction value, with net income of $147m, according to its results release.

DoorDash makes several claims about the benefits. It says Instacart customers could shop at more than 50,000 additional stores, on top of the nearly 100,000 already on Instacart, and that letting members of DashPass and Instacart+ pay one fee instead of two would save them “an estimated $100 million per year”. In its results release DoorDash also says it sees “a multi-year path to $500 million or more of annual synergies, net of investments”, but expects to reinvest more than all of the savings in the first year after closing.

AI runs through the pitch too. The combined company would offer retailers “the advertising and AI tools each company has built”, the release says. DoorDash says it sees two contests in AI, one to be the leading digital personal assistant and one to be the leading physical network, and that its strategy “remains focused on winning the battle for atoms”. It still lists agents it has shipped, including Ask DoorDash, Text DoorDash and a Model Context Protocol connection that “interfaces with external AI agents”, such as those companies use for corporate ordering. Google is building the same kind of link for apps inside Search and Gemini, with Instacart among its first partners.

“Grocery is one of the hardest things to get right online,” said Tony Xu, DoorDash’s co-founder and chief executive. Instacart chief executive Chris Rogers said the combination would let the company “accelerate innovation across the grocery industry”.

Why the close is at least a year away

A timetable of 14 to 20 months is long for a deal with no financing condition, and it signals that both sides expect close scrutiny. The deal would put DoorDash’s delivery network together with a platform that, by Instacart’s count, works with more than 2,200 retail banners and nearly 100,000 stores. The forward-looking statements name the Competition Act in Canada and Israel’s Economic Competition Law, and warn that approvals could come with conditions that hurt the expected benefits.

The commitments in the release read as answers, given in advance, to the questions reviewers are likely to ask about grocers and gig workers. DoorDash promises “no grocery exclusivity”, so grocers can keep working with any delivery platform. Instacart’s shoppers could choose whether to take DoorDash orders or keep working only on Instacart. DoorDash says it will keep Instacart’s brand, app and enterprise technology, which grocers can use to run their own websites and retail media networks. None of these commitments is binding on any regulator, and none has said what it thinks.

DoorDash’s own results release is frank about the gap it wants to close: grocery delivery “still isn’t there”, and consumers “are still asked to pay a premium for imperfect delivery”. Its answer is scale. Managing inventory in a warehouse is “a fixed cost business”, it says, and Instacart’s volume would help spread that cost. The joint release also argues that “the biggest online retailers and grocers are racing ahead” with their own fleets and AI shopping assistants. The deal lands in a busy month for commerce technology, from Walmart’s drone deliveries with Wing to software deals such as Salesforce’s $5.66bn purchase of Braze, whose customers include Instacart.