DoorDash (NASDAQ: DASH), the US food delivery platform, has agreed to buy Instacart for $65 a share, a deal worth about $17bn. Instacart, listed as Maplebear (NASDAQ: CART), runs grocery delivery, and the companies announced the agreement around midday London time today.
At about 7:30 pm London time, with the US session still open, DoorDash was at $181.06, up 6.8% from yesterday’s close of $169.49. It reported third-quarter results the same morning. Instacart was at $57.43, down 1.7% from $58.42. These are intraday figures, not closing prices.
The deal is a definitive agreement, a signed contract, but it still needs Instacart shareholder approval and US antitrust clearance, including the HSR waiting period, the statutory review before large mergers can close. The companies said Instacart’s board approved it unanimously, and holders of about 19% of the shares have agreed to vote in favour.
Instacart holders can take $65 in cash, or 0.3372 DoorDash shares, or $48.75 in cash plus 0.0843 DoorDash shares. Stock is capped at 25% of the total, so at least 75% of the price is cash, with proration if elections exceed the cap. DoorDash will fund the cash from its own resources and debt.
The $65 is a 26% premium to Instacart’s close of $51.68 on the 22nd of October, before the first reports. Most of that was already priced in: the shares closed at $60.88 on Monday, up 17.8% from the 22nd, and at $58.42 yesterday, leaving the offer 11.3% higher.
At $57.43, the gap to the offer is $7.57, so the shares trade 11.6% below it. That spread, the discount a target trades at while a deal is pending, reflects the wait and the risk of regulatory pushback; one Bloomberg Intelligence analyst expects pushback and no quick approval. DoorDash shares closed Monday 9.4% below their close on October 22.
Tony Xu, DoorDash’s co-founder and chief executive, said:
Grocery is one of the hardest things to get right online. Someone has to pick a ripe avocado, find a substitute you’d choose yourself, and get the ice cream to you before it melts.
Tony Xu, DoorDash
DoorDash plans to keep the Instacart brand and app and keep grocery delivery non-exclusive. Instacart has suspended its guidance and cancelled its earnings call, which had been set for the 5th of November.