Two popular delivery services are joining forces.
About DoorDash’s Acquisition of Instacart:
Today, DoorDash announced plans to acquire Instacart. DoorDash will pay $65.00 per share of the grocery delivery service, representing a 26% premium on $CART’s recent closing price. In total, the deal is worth approximately $17 billion and will be at least 75% cash. Current Instacart shareholders will be able to select cash, DoorDash ($DASH) stock, or a combination of both.
In a press release detailing the vision for the combined companies, it’s noted that those with DashPass or Instacart+ would be able to enjoy benefits of both services for one price. Estimates suggest this could save customers $100 million per year in membership fees. Elsewhere, the companies state that combining DoorDash and Instacart will provide Dashers and Shoppers (delivery couriers for both brands, respectively) more opportunities as they can select either restaurant or grocery delivery orders.
Currently, the transaction is expected to close in late 2027 or the first half of 2028. After it does close, DoorDash intends to retain the Instacart brand and app.
What They’re Saying:
Announcing the acquisition, DoorDash co-founder and CEO Tony Xu stated, “Grocery is one of the hardest things to get right online. Someone has to pick a ripe avocado, find a substitute you’d choose yourself, and get the ice cream to you before it melts. Instacart has spent years learning to do that well for grocers, while DoorDash has built a delivery network and technology that local stores rely on every day.”
Xu continued, “Together, we could give stores of every size more of those tools and unlock the potential of grocery delivery. It’s still early innings, but we know that when more people shop local, more dollars stay local.”
On the other end, 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… Together, we can accelerate innovation across the grocery industry and make online grocery more seamless and affordable for the millions of households we serve.”
My Thoughts:
When it comes to mergers and acquisitions, the companies are always quick to talk up the benefits that the deal will have for consumers and not just the businesses themselves. But what they say beforehand and what happens after are often very different.
With that in mind, although I do think DoorDash and Instacart make some good points about how teaming up could be beneficial for workers and customers, I’m not yet convinced that will be the case. Take, for example, the combined DoorDash-Instacart+ membership. Having both could be good… but only if they keep the price where it currently is. And those are the sorts of details we won’t know for quite some time, since this deal may not even close for another 18 months or so.
On that note, we’ll have a long while to wait and see what happens with this proposed merger.
