Short: DoorDash is reportedly in late-stage talks with Instacart to acquire the popular grocery delivery service in a deal worth around $17 billion. An announcement could come as early as midweek, sources said, who also warned that nothing had been finalized and the deal could still fall apart.
Instacart was also recently linked to rumors of an Uber acquisition, but sources say those discussions are no longer active. It’s unclear whether Uber would try again if DoorDash falls short.
DoorDash shares are up 2.61 percent on the news as of this writing, while Instacart shares are down about the same percent. For comparison, DoorDash has a market cap of around $74.7 billion and Instacart is worth around $14 billion.
The potential acquisition comes at a crucial time for food delivery platforms. Gone are the boom times of pandemic orders, and those that have survived for so long now must compete with rising labor costs, stricter regulations regarding employees/delivery drivers, and competition from heavyweights like Amazon and Walmart.
As Reuters highlights, the deal would give Instacart access to DoorDash’s vast delivery network and customer base. The outfit would also benefit from existing retail partnerships.
To be clear, the two platforms currently operate in similar but different categories. DoorDash specializes in restaurant/fast food and convenience store delivery, while Instacart has traditionally focused on grocery delivery. Consolidation in this area could also be beneficial for consumers, as combining services could result in one less monthly or annual subscription fee for those who currently subscribe to both services.
History has shown that consumers are willing to pay money to automate and simplify certain aspects of their lives, and having groceries delivered to your doorstep from the grocery store or your favorite restaurant certainly fits the bill. I’ve relied on grocery delivery for a few years now and have never once missed the crowded aisles and long checkout lines at my local store.
