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DoorDash said on Thursday it would buy Instacart in a deal valued at about $17 billion US, stepping up its push into the fast-growing U.S. grocery delivery market as competition among app-based platforms intensifies.
DoorDash has offered Instacart shareholders $65 per share held, representing a premium of about 26 per cent to the stock’s closing price on Oct. 22, before reports of deal talks first emerged.
Delivery companies are chasing growth by expanding into grocery and retail as the restaurant delivery business matures.
“Grocery is one of the hardest things to get right online,” said Tony Xu, co-founder and CEO of DoorDash, adding that Instacart has spent years learning to do that well for grocers.
WATCH | Meal kit companies now starved for customers after COVID-era boom:
Meal kit companies now starved for customers after COVID-era boom
After enjoying a pandemic-era boom with millions stuck at home, the meal kit industry is now seeing a huge drop-off in sales as the affordability crisis hits Canadians in the wallet.
Grocery deliveries are gaining traction as budget-conscious consumers embrace the convenience of online deliveries, especially when gas prices have hit new highs due to disruptions linked to the war in Iran.
Meanwhile, heightened competition following a slowdown in orders from the pandemic peaks, along with rising cost pressures and tough regulatory scrutiny over the treatment of gig workers, has spurred a flurry of deals in the industry.
These include Just Eat Takeaway acquiring Grubhub for $7.3 billion US, DoorDash’s purchase of Wolt and the U.K.’s Deliveroo in 2025, as well as Uber’s $15 billion US deal for Delivery Hero earlier this year and Postmates in 2020.
The DoorDash-Instacart transaction is expected to close at the end of 2027 or the first half of 2028.
In a regulatory filing on Monday, Instacart said it would wind down its Caper Cart smart shopping-cart business by the end of the second quarter of 2027, expecting related pre-tax charges of $55 million to $80 million.