DoorDash swallows rival Instacart in a $17 billion grab

DoorDash says it is buying Instacart. The deal values each Instacart share at $65 and the whole company at roughly $17 billion, a 26% premium to the October 22 close, the last trading day before reports of talks surfaced. Instacart's board approved it unanimously.

It is mostly a cash deal: at least 75% will be paid in cash, the rest in DoorDash stock for Instacart holders who choose it. DoorDash will borrow to cover the cash part and already has a one-year bridge loan lined up with JPMorgan.

If you don't follow US delivery: DoorDash brings restaurant food and pretty much anything from the stores next door, while Instacart is the grocery and big weekly shop app. During the pandemic Instacart was a darling worth $39 billion privately. Now it goes for less than half of that.

The customer promises are the usual ones. Instacart users would get more than 50,000 extra stores on top of the nearly 100,000 already on the platform. DashPass and Instacart+ would merge into a single membership, which DoorDash estimates will save people about $100 million a year. The Instacart brand and app stay.

The pitch itself is worth a look. Big retailers are building their own warehouses, courier fleets and AI shopping assistants, and a small grocer on thin margins can't do that alone. With AI, the two companies say, the field risks tilting even further toward the giants. The combined company promises to hand local stores the delivery, tech and AI tools they couldn't build themselves.

Don't expect it soon. Closing is targeted for the end of 2027 or the first half of 2028, pending an Instacart shareholder vote and antitrust approval in the US, Canada and Israel. Holders of about 19% of the shares have already agreed to vote yes.

Verdict: US grocery delivery just lost a big independent player, and the fight for shoppers is increasingly being fought by AI assistants.