DoorDash Instacart acquisition: will DashPass, Instacart+ merge?

DoorDash is paying $65 for each Instacart share. Instacart investors can take that in cash, take 0.3372 DoorDash shares instead, or mix the two. That price is a 26% premium to where Instacart’s stock closed on Oct. 22, the last trading day before news of the talks leaked.

At least 75% of the price will be paid in cash, from DoorDash’s own reserves plus new borrowing, with JPMorgan lined up to provide a short-term bridge loan. The boards of both companies have approved it, and holders of about 19% of Instacart’s shares have already agreed to vote yes.

For context, Instacart’s stock market value was a little over $13 billion before the announcement, and its shares were up 25% this year. On the same day, Instacart posted quarterly revenue of $1.1 billion, up 17% from a year earlier, with $147 million in net income. It then canceled its earnings call and pulled its financial forecasts because of the pending sale.

DoorDash says DashPass and Instacart+ members will pay one fee instead of two after the deal closes. It hasn’t said what the combined plan will be called, what it will cost, or which perks survive. DoorDash estimates the change could save members around $100 million a year in total, which tells you the company expects a lot of overlap between the two customer bases.

Here’s what each plan offers today, so you know what’s at stake:

• DashPass: launched in 2018 at $9.99 a month, built around unlimited free delivery on eligible orders, mostly from restaurants.
• Instacart+: launched in 2022 at $9.99 a month or $99 a year, with free delivery on orders over $35, lower service fees and 5% credit back on eligible orders.

If you only use one service, the merger may simply add stores to the app you already have. DoorDash says Instacart users will get access to more than 50,000 additional stores through its network.

Not before closing, and maybe not much after. DoorDash says it will keep the Instacart brand, its app and the software it sells to supermarkets that run their own online stores. In other words, you should still see two apps, not one.

DoorDash also made a few promises for after the deal closes. Local grocers won’t be locked into one platform and can keep working with either service. Supermarkets will be able to use Instacart’s technology to build their own ordering sites and ad businesses, and DoorDash’s delivery network to fill more of those orders at a lower cost.

Whether prices fall is the open question. Two rivals merging usually means less pressure to cut fees, and that is exactly what regulators will study. The deal would put the two largest grocery delivery platforms in the US under one owner, with Amazon, Walmart and Uber as the main rivals left standing.

If you earn money delivering, this is the part that matters most. DoorDash says Instacart shoppers will keep control over their working hours and which orders they accept. They will also be able to decide whether to take DoorDash orders on top of Instacart work, or stick with shopping only.

That could mean more orders per shift for people who already juggle both apps. It could also mean fewer rival platforms competing for drivers over time, which is a concern worth watching once the combined company sets its pay rules.

DoorDash started as a restaurant courier, and while it already sells grocery delivery, it competes there against Instacart, Uber, Walmart and Amazon. Meanwhile, its rivals keep moving into takeout, its home turf. Buying Instacart gives DoorDash years of grocery know-how, such as picking produce and choosing substitutions, plus deals with retailers it would otherwise have to win one by one.

CEO Tony Xu put it this way: grocery is one of the hardest things to get right online. DoorDash’s own statement argues that big retailers are building their own delivery fleets, memberships and AI shopping assistants, and that a local grocer on thin margins can’t build all of that alone.

This isn’t the first attempt. The two companies talked in 2021, when Instacart was valued at $40 billion to $50 billion, but those talks ended over antitrust worries. This round became public last week, when reports said Instacart was exploring a sale and had spoken with DoorDash and Uber. Uber reportedly walked away.

• Keep paying only for what you use. There is no merged plan yet, and no reason to sign up for a second membership in hopes of a bonus later.
• Watch the annual plan. If your Instacart+ renews yearly at $99, check the renewal date. The deal won’t close before late 2027, so a renewal next year is still a normal purchase.
• Expect news from regulators, not the apps. The next real milestones are the Instacart shareholder vote and antitrust reviews in the US and Canada.