Oct. 29 (UPI) — Restaurant meal delivery giant DoorDash announced Thursday it has acquired the grocery delivery platform Instacart in a stock transaction worth $17 billion.
The deal, which went off at $65 per share, will unite the biggest prepared food delivery platform with the dominant presence in the online grocery delivery market, the companies said in an announcement.
“Grocery is one of the hardest things to get right online,” said Tony Xu, co-founder and CEO of DoorDash. “Someone has to pick a ripe avocado, find a substitute you’d choose yourself, and get the ice cream to you before it melts.
“Instacart has spent years learning to do that well for grocers, while DoorDash has built a delivery network and technology that local stores rely on every day. Together, we could give stores of every size more of those tools and unlock the potential of grocery delivery. It’s still early innings, but we know that when more people shop local, more dollars stay local.”
Meanwhile, Instacart CEO Chris Rogers said the landmark deal “allows us to do even more.
“When our purpose-built grocery technology and trusted retailer and brand relationships are combined with DoorDash’s global consumer reach and logistics capabilities, we can create new opportunities for our retail and brand partners, offer an even better experience for customers and shoppers, and deliver compelling value for our shareholders.”
Under the terms of the deal, the aggregate transaction consideration will be at least 75% cash, with Instacart stockholders able to elect cash, DoorDash stock, or a combination of both.
Instacart’s board of directors has unanimously approved the agreement, the companies said. Both are based in San Francisco.
While the companies have largely different areas of focus, they overlap in some aspects. Instacart is estimated to control 58% of the U.S. third-party grocery delivery market and its combination with DoorDash could raise some antitrust red flags with the Trump administration’s Federal Trade Commission.
The merger could also face opposition from grocery stores as well as delivery drivers whose are losing an independent employer.
The American Economic Liberties Project, a nonprofit advocating against what it calls concentrated economic power, condemned the deal and urged the FTC to block it.
“This is a brazen merger given the amount of heat on both companies for ongoing harms to restaurants, grocers, delivery drivers and consumers,” said Lee Hepner, the group’s senior legal counsel.
“Instacart and DoorDash have spent the better part of a decade bullying main street businesses and denying fair pay and benefits to their combined nine million workers. This merger represents the next frontier of data-driven abuse, exploiting massive asymmetries of power to squeeze worker compensation on the way in and drain consumer wallets on the way out.”
The proposed deal also comes amid mounting scrutiny over surveillance pricing, which both DoorDash and Instacart employ.
On Thursday the FTC launched an inquiry into the practice of such “personalized pricing,” ordering nine major airlines, ride-sharing companies and food-delivery firms — including DoorDash and Instacart — to “provide detailed information that will allow the agency to study the use of personal data to set prices and compensation.”
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