DoorDash To Buy Rival Instacart In $17 Billion Deal

DoorDash Inc. agreed to buy rival Instacart in a deal that values the company at about $17 billion, the latest sign of consolidation in an increasingly competitive delivery market.

DoorDash will pay $65 a share in cash and stock, it said in a statement Thursday, when it also released its third-quarter financial results. That represents a 26% premium to Instacart's closing stock price on Oct. 22, the last trading day before media reports about a possible sale. Bloomberg News reported earlier this week that DoorDash and Instacart were in advanced deal talks.

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DoorDash plans to use cash on hand and debt from JPMorgan Chase & Co. to finance the purchase, and is targeting a debt structure that maintains investment-grade ratings. The deal is expected to close toward the end of 2027 or in the first half of 2028. Following the closing, DoorDash said it expects to keep Instacart's brand, enterprise technology products and app.

Shares of Instacart, which trades as Maplebear Inc., declined about 2%. DoorDash's stock jumped around 8%. 

San Francisco-based Instacart went public in 2023, following a swell of momentum during the Covid-19 pandemic that benefited the wider e-commerce and on-demand delivery sectors. Since then, the company has faced heightened competition as major rivals such as DoorDash and Uber Technologies Inc. have diversified beyond restaurant takeout into deliveries for other items, including groceries. 

For DoorDash, which is already the leading restaurant delivery app in the US, buying Instacart would boost its grocery delivery segment, which Chief Executive Officer Tony Xu recently described as the fastest-growing part of the business. The deal would also better position DoorDash to compete with retail giants like Walmart Inc. and Amazon.com Inc., which have made online grocery orders a bigger priority.

The broader delivery-app segment has been consolidating since the pandemic. In that time, DoorDash has been on a buying spree. It completed its purchase of UK-based Deliveroo last year, in addition to buying hospitality tech company SevenRooms Inc. and ad-tech firm Symbiosys. It also agreed in September to buy the campus dining business of smaller rival Grubhub. Uber, which held talks at one point to buy Instacart, signed a deal in July for Germany's Delivery Hero SE, a move meant to strengthen its position internationally.

Instacart's higher-margin advertising and back-end technology business would also bolster DoorDash's more recent efforts to provide enterprise tools for in-person dining and retailer ad management. 

Instacart's enterprise customers include Costco Wholesale Corp., which has used Instacart's tech to power online ordering in parts of North America and Europe. While transaction revenue continues to comprise the bulk of Instacart's total revenue, sales for the advertising and enterprise side of the business accounted for nearly 30% in the second quarter, and were faster-growing.

But not all of Instacart's B2B bets have paid off. The company recently said it will stop offering high-tech shopping carts to grocers, citing the cost of developing the technology and “competing priorities” for its retail customers.

DoorDash Results

On Thursday, DoorDash also reported third-quarter results that exceeded Wall Street's estimates, providing an early look into consumer demand for delivery services ahead Uber's results next week.

Third-quarter gross order value grew 36% to $33.9 billion, beating the average analyst projection of $33.7 billion. Total orders also topped expectations.

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DoorDash also issued a fourth-quarter outlook for gross order value of $35.4 billion to $36.4 billion, ahead of estimates.

However, the company continues to expect “significant levels of ongoing investment” in various initiatives including new shopping categories, international markets and its technology stack. Adjusted earnings before interest, taxes, depreciation and amortization will be $900 million to $1.1 billion for the last quarter of the year. The midpoint falls slightly short of the average Bloomberg-compiled analyst estimate of $1.06 billion.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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