DoorDash agreed to acquire Instacart for $65 a share, or about $17B in equity value, a 26% premium over Instacart’s share price on October 22, before news of the deal broke. Instacart shareholders can take cash, DoorDash shares, or both, but stock can’t exceed 25% of the total payout. The deal is DoorDash’s largest acquisition to date, ahead of its $8.1B purchase of Finnish delivery app Wolt in 2021 and its $3.9B acquisition of UK delivery app Deliveroo in 2025.
After the deal closes, DoorDash plans to keep Instacart operating under its own name, website, and app, and with its existing enterprise tools. It will also continue to let grocers work with rival delivery services. However, it plans to combine the two platforms’ membership programs, DashPass and Instacart+, into one membership, which it says will save members about $100M a year. That’s a smart move in my opinion, as memberships aren’t about revenue, but about creating sticky shopping habits. Last week, I praised Walmart for doing the same when it combined its Walmart+ and Sam’s Club Plus memberships into one $120 membership.
The deal isn’t expected to close until late 2027 or the first half of 2028, pending antitrust approval in the US, Canada, and Israel, though we could probably remove US from that list, given how the term “antitrust” has become a relic term from a former America.
This isn’t DoorDash’s first time attempting to acquire Instacart. DoorDash held talks with Instacart as far back as 2021 to acquire the company when it was private for a reported $40B to $50B, but the talks fell apart, partly over antitrust concerns that they likely won’t face this time around. Since then, Instacart went public in 2023 at $30 a share, valuing it at about $10B, and five years later, although Instacart’s value has increased significantly since its IPO, DoorDash is getting it for less than half the price it discussed in 2021.
Why DoorDash wants Instacart:
- Grocery – DoorDash delivers restaurant meals, groceries, retail goods, alcohol, and convenience items, but restaurants are still the core of its business. Grocery is its fastest-growing category, yet only one in four DoorDash users placed a non-restaurant order in 2024. Instacart, on the other hand, is grocery first, although it has expanded into other categories in recent years. Every retailer, marketplace, and delivery platform has its sights set on grocery right now, given the steady weekly orders from customers, versus the less frequent restaurant delivery, which customers cut back on in tough times. The fact that every platform is so desperate to grow its grocery market share makes me think we’re about to head into tough times, but that’s a conversation for a different day.
- Ad revenue – Instacart made $331M from ads and other revenue last quarter, about 30% of its total, while DoorDash, which doesn’t break out its ad revenue, last said its ad business had passed a $1B annual run rate. Selling digital shelf space to CPG brands carries much better margins than delivery fees, which is good for DoorDash’s bottom line.
- Enterprise tech – Instacart sells tools to grocers that DoorDash doesn’t have, such as its Caper smart carts, digital shelf labels, and Carrot Ads, a white-label retail media platform used by 220+ grocery banners. More of those high-margin ads!
- Scale – Instacart works with 2,200+ retail banners covering nearly 100,000 stores, which DoorDash will add to the 2,700 Kroger stores it delivers for. DoorDash will also absorb Instacart’s 600k+ shoppers, adding to its fleet of 9M+ drivers. Though I’d imagine there is substantial overlap between the two networks, as drivers often contract for multiple delivery apps.
- Market share – DoorDash already accounts for 59% of US delivery app spending as of Q3, while Instacart and Uber Eats commanded about 18% each. Adding Instacart leaves Uber Eats and Grubhub as its only real rivals among third-party delivery apps, outside of Walmart and Amazon, which run their own grocery and restaurant delivery through partnerships and with their own networks.
Is it good or bad for the industry?
- PRO: Independent and regional grocers get a delivery partner with the reach to compete against Amazon and Walmart, which run their own networks. It’s the same reason Kroger and Albertsons wanted to merge — to effectively compete against the two Goliaths.
- PRO: It’s a premium exit in a category investors have abandoned. VC investment in online grocery fell from $20.3B in 2021 to $566M through Q3 2026, per PitchBook.
- PRO/CON: It’s more consolidation in an already consolidated industry. DoorDash and Uber Eats control about 90% of US restaurant delivery, and Instacart has about 58% of third-party grocery delivery, per the American Economic Liberties Project. Generally speaking, I support more competition in a market, which offers consumers more choice and tends to bring down prices, but like I said, consolidation may be the only way to bring real competition to Amazon and Walmart, which in itself is a good thing. In this case, there are clear pros and cons to the consolidation.
- CON: Drivers lose leverage. The two platforms have about 9.6M drivers between them, and an acquisition would mean that DoorDash and Instacart stop competing against each other for those drivers, which could prove to be a “nowhere else to go” scenario for them.
