DoorDash to buy Instacart in $17 billion deal

DoorDash said on Thursday that it will acquire Instacart for $17 billion, creating a combined platform that will let customers order groceries and other retail items through DoorDash’s delivery network. The transaction will add more than 50,000 stores to the selection available to Instacart shoppers, on top of the roughly 100,000 stores already on the Instacart platform. Members of DashPass and Instacart+ will be able to use a single membership fee after the merger.

Instacart CEO Chris Rogers said, "> Over the last 14 years, Instacart has transformed online grocery by helping retailers of all sizes compete and grow, and joining forces with DoorDash allows us to do even more." DoorDash expects to retain the Instacart brand and its technology, and the two companies will operate independently until the deal closes.

Shares of DoorDash rose more than 9% in pre-market trading following the announcement. The deal follows a wave of consolidation in the delivery sector, including DoorDash’s 2023 purchase of Deliveroo and Uber’s ownership of Postmates.

Analysts note that DoorDash holds about two-thirds of U.S. food-delivery volume, though its stock has fallen roughly a third over the past year amid rising costs. Instacart, which saw rapid growth during the pandemic, has seen its share price stagnate as competition from Amazon and Walmart intensifies.

The merger could generate cost savings by consolidating corporate functions, but it remains uncertain how much additional profit can be extracted from consumers, who have expressed concerns about rising delivery fees amid higher fuel costs. DoorDash recently settled a New York City regulator case for $131.5 million, acknowledging that some delivery workers were underpaid or received late tips. The company said, "> Simply put, we screwed up. Our mistakes meant some Dashers were underpaid or paid late. While these mistakes weren’t intentional, that doesn’t make them okay."