DoorDash agrees to buy Instacart for $17 billion and expects a long antitrust review

DoorDash has agreed to buy Instacart, the app built on the weekly grocery shop, in a deal that would put America’s largest restaurant-delivery app and its largest grocery-delivery app under one owner. The buyer is paying mostly in cash, and it has already told investors to expect a long wait before regulators decide whether the merger can go ahead.

For anyone who orders groceries on a phone, the question is less about who owns which app than about who sets the fees. Instacart charges grocers for its software and households for delivery and membership, and DoorDash does the same with restaurants and its DashPass subscribers. Combined, one company would stand between millions of homes and thousands of stores, setting both the price of delivery and the pay of the people who shop and drive.

What DoorDash is paying for

DoorDash is offering $65 a share, an equity value of about $17 billion and a 26% premium to Instacart’s price before the first media reports of talks. At least three-quarters of the money will be cash, backed by a JPMorgan bridge loan of up to $13 billion. Holders of about 19% of Instacart’s shares have already committed to vote in favor.

The buyer arrives in strong shape, reporting 993 million third-quarter orders, up 28% on a year earlier, revenue of $4.6 billion, up 34%, and net income of $466 million. Its shares rose about 6% after the announcement, according to Yahoo Finance.

DoorDash’s pitch is aimed at shoppers and small stores. It says Instacart customers would reach more than 50,000 additional stores, that DashPass and Instacart+ members would pay one fee instead of two, saving an estimated $100 million a year, and that grocers could keep working with any delivery platform.

The overlap regulators will study

Those promises are the company’s own, not conditions imposed by any regulator, and the overlap is large. DoorDash handled 65.1% of all US delivery orders last year across restaurants, grocery and retail, against 25.8% for Uber Eats and 9.1% for Instacart, according to YipitData figures provided to Reuters. In grocery alone, Instacart is estimated to hold 58% of US third-party delivery, according to figures cited by UPI. “There is meaningful overlap between the companies, especially in grocery delivery,” said Zak Stambor, a retail and ecommerce analyst at Emarketer. DoorDash can answer that its real grocery rivals are Walmart, Amazon and Target, which run their own same-day delivery.

Consumer and labor advocates want the merger stopped. The American Economic Liberties Project and Groundwork Collaborative have urged the Federal Trade Commission to block it, and Groundwork’s president, Lindsay Owens, called the pair “two of the biggest ripoff machines in America.” The FTC has also just ordered DoorDash, Instacart and other companies to explain how they use personal data to set prices and pay. DoorDash says couriers and shoppers would gain more ways to earn; the American Economic Liberties Project argues the opposite for a combined workforce it puts at nine million.

The review is largely North American. Approvals are needed in the United States, Canada and Israel, and customers of DoorDash’s European brands, Wolt and Deliveroo, face no direct change.

A long road to closing

The companies expect the deal to close at the end of 2027 or in the first half of 2028, subject to an Instacart shareholder vote, the expiry of the US Hart-Scott-Rodino waiting period and the Canadian and Israeli approvals. DoorDash’s filing sets an outside date 12 months after the agreement was signed on October 28, extendable four times by three months each if antitrust clearance is the only thing missing. If the merger dies on antitrust grounds, DoorDash would owe Instacart $1.25 billion. Instacart would owe DoorDash $650 million if it walked away for a better offer.

Tony Xu, DoorDash’s co-founder and chief executive, described grocery as one of the hardest things to get right online, because someone has to pick a ripe avocado and get the ice cream home before it melts. Until the regulators decide, the two apps keep competing for the same person in the same aisle.

Tags: antitrust, Instacart, DoorDash, Federal Trade Commission, grocery delivery, Tony Xu