DoorDash Stock Pops, Instacart Falls After Companies Announce $17 Billion Acquisition Deal

DoorDash (DASH) announced plans Thursday morning to acquire hyperlocal grocery delivery provider Instacart (CART) in a deal valued at $17 billion.

DoorDash, which is primarily known for its restaurant food delivery business, will pay $65 per Instacart share, a 26% premium to the stock’s Oct. 22 closing price. The deal includes 75% cash, with Instacart shareholders able to choose cash, DoorDash stock, or a combination of both. Instacart’s board of directors unanimously approved the deal, according to a press release.

“Grocery is one of the hardest things to get online,” DoorDash CEO Tony Xu said in the release. “Instacart has spent years learning how to do this well for grocers, while DoorDash has built a delivery network and technology that local stores rely on every day. Together, we could provide stores of all sizes with more of these tools and unlock the potential of grocery delivery.

DoorDash stock jumped more than 5%, while Instacart stock fell 1.5%.

The acquisition comes as Walmart (WMT) and Amazon (AMZN) are gaining market share in the grocery delivery market, particularly for same-day and one-hour delivery.

Ahead of the announcement, Wedbush analyst Ygal Arounian said the combination of Instacart and DoorDash could “potentially prove to be a competitive differentiator.”

“The combination of strong restaurant delivery and a market that includes diverse grocers from Instacart can be a critical combination against Walmart and Amazon in particular, which also continue to gain traction in this market,” Arounian said.

Walmart currently has about a 30.9% share of the online grocery market, ahead of Amazon with about 23.6%, according to Wedbush.

For customers worried about the impact of the Instacart acquisition on pricing, the company said shoppers will now get two subscriptions for the price of one or more picks.

“Instacart customers could shop at more than 50,000 additional stores, in addition to the nearly 100,000 stores on the Instacart platform today,” the release said.

For local business owners, the company said it will give them more ways to make money.

Follow Brooke DiPalma on X at @BrookeDiPalma or email him at bdipalma@yahoofinance.com.