By Evgenia Filimianova

DoorDash is offering $17 billion to buy grocery delivery company Instacart, potentially bringing together two of the biggest names in U.S. food delivery as they look to strengthen their position against larger online retailers.

The companies announced on Thursday that DoorDash would pay $65 per Instacart share. The $17 billion offer represents a 26 percent premium to Instacart’s closing share price on Oct. 22, the last trading day before media reports of a possible deal emerged.

The companies said the merger would allow them to offer local grocers and retailers a wider range of delivery, advertising, and artificial intelligence tools to compete with large online shopping platforms.

DoorDash mainly delivers restaurant meals, while Instacart focuses on grocery shopping. Together, they said they could help stores reach more customers while keeping sales with local businesses rather than large national platforms.

DoorDash Chief Executive Tony Xu said grocery delivery remains one of the hardest parts of online shopping because customers expect fresh food, accurate substitutions, and fast delivery.

“Together, we could give stores of every size more of those tools and unlock the potential of grocery delivery,” Xu said.

He added that shopping more at local businesses helps keep more money in local communities.

Instacart Chief Executive Chris Rogers said the deal would help the company build on its grocery technology and strengthen relationships with retailers and consumer brands.

He added that the companies could also speed up innovation and make online grocery shopping easier and more affordable.

More Stores, One Membership

The companies said customers will gain access to a much larger selection of stores.

Instacart users will be able to shop at more than 50,000 additional stores, adding to the nearly 100,000 stores already available through the Instacart platform.

A DoorDash courier rides his bike in Manhattan on Nov. 13, 2020. Carlo Allegri/Reuters

DoorDash also plans to combine the benefits of its DashPass subscription with Instacart+.

Instead of paying for two separate memberships, customers would pay a single fee. The companies estimate this could save members around $100 million a year in membership costs.

Quarterly Results

The companies announced the acquisition alongside their third-quarter earnings.

DoorDash reported on Thursday that total orders rose 28 percent from a year earlier to $993 million, while revenue increased 34 percent to $4.6 billion.

It said buying Instacart would help build “the next generation of tools and services” for local merchants, give customers more choice, and create more earning opportunities for delivery workers.

Instacart reported on Thursday what Chief Executive Chris Rogers described as its “best quarter as a public company.”

The company’s gross transaction value rose 15 percent to $10.5 billion from a year earlier, while revenue increased 17 percent to $1.1 billion.

A photo illustration of the Instacart logo. Justin Sullivan/Getty Images

“Online grocery is still an underpenetrated category, and we’re in the early stages of realizing what our purpose-built grocery technology can do to transform it,” Rogers said.

Apoorva Mehta founded Instacart but left the company after its 2023 initial public offering. He said on Thursday that the two companies had explored joining forces for years.

“We kept coming back to it because the industrial logic has always been clear,” he wrote in a post on X. “Customers have 21 meals a week to figure out. Groceries and restaurant delivery each solve part of that problem. Serving customers well means bringing together the best of both.”

The DoorDash-Instacart deal is expected to close towards the end of 2027 or during the first half of 2028. Until the acquisition is completed, the two companies will continue to operate separately.

If the deal closes, DoorDash said it plans to keep the Instacart brand, its grocery technology products, and its consumer app.

New York City’s Department of Consumer and Worker Protection said on Wednesday that the proposed merger continues “a troubling trend of mega-corporations consolidating.”

“Whether or not this merger proceeds, we will fully enforce delivery workers’ rights,” it added.