Key Points
- DoorDash agreed to acquire Instacart for approximately $17 billion, with a proposed value of $65 per share and a closing date potentially extending into 2028.
- Instacart shares remain well below the deal price, reflecting uncertainty surrounding regulatory approval, transaction timing, and deal completion.
- DoorDash expects substantial long-term benefits from the combination, but antitrust concerns could complicate its expansion into grocery delivery.
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DoorDash (NASDAQ: DASH) agreed on Thursday, Oct. 29, to acquire Maplebear Inc. (NASDAQ: CART), doing business as Instacart, in a transaction valued at approximately $17 billion. The offer prices the target at $65 per share, with stockholders able to elect cash, DoorDash stock, or a combination, subject to proration. Usually, an acquired company's stock immediately climbs to approach the buyout price. Instead, Instacart shares hovered near $57, leaving a wide spread between the current price and the proposed payout.
This pricing gap suggests investors may anticipate a prolonged, difficult path to final approval. The companies estimate the transaction will not close until late 2027 or the first half of 2028. In the interim, Instacart has suspended its forward guidance and canceled its scheduled Nov. 5 earnings call. For investors analyzing this local commerce combination, the wide discount signals that Wall Street expects regulatory scrutiny before any shares change hands.
Price Checks and Missing Premiums
The deal's mechanics highlight two companies operating from different positions of strength. DoorDash reported a solid third quarter, posting GAAP earnings of $1.06 per share, above the 81 cents consensus. Revenue expanded 34% year over year to $4.62 billion, topping estimates and setting internal records for marketplace gross order volume.
This core business strength gives management the flexibility to pursue an aggressive expansion into grocery delivery. DoorDash plans to use cash on hand and debt financing to fund the cash portion of the deal, which reportedly makes up at least 75% of the total consideration.
On the other side of the table, Maplebear Inc. faces a more complicated picture. While third-quarter revenue grew to roughly $1.1 billion and gross transaction volume increased 15%, the company reported earnings per share of 60 cents, missing analyst estimates.
After the deal announcement, shares settled around $57.11, roughly 12% below the $65 offer. A discount of this magnitude in merger arbitrage can reflect significant market doubt about the probability of a successful close, not just the time value of money.
Too Many Cooks: The Federal Pushback
The skepticism priced into Instacart's stock price stems directly from the regulatory landscape. DoorDash currently holds a leading share of U.S. restaurant delivery, while Instacart is a major player in third-party grocery delivery. Bringing the two major U.S. delivery applications under one roof is likely to draw antitrust scrutiny from the Federal Trade Commission.
History provides a useful guide here. DoorDash previously explored acquiring Instacart in 2021 when valuations were substantially higher. Those preliminary talks largely dissolved because of potential opposition from antitrust regulators. The FTC has also scrutinized delivery platforms' pricing and fee practices.
Beyond federal regulators, the proposed merger is already drawing organized opposition. Advocacy groups like the American Economic Liberties Project have urged regulators to block the transaction, citing concerns over wage suppression and reduced leverage for the roughly nine million gig workers operating across both platforms.
Local officials in major metropolitan areas have echoed these concerns, warning that corporate consolidation could lead to higher consumer prices. DoorDash's recent string of smaller acquisitions, including platforms like Deliveroo and SevenRooms, along with its announced agreement to acquire Grubhub's campus dining business, illustrate its broader expansion through acquisitions.
The Long Road to Closing
If the deal survives the regulatory gauntlet, the strategic and financial rationale becomes clear. The ultimate goal is to build enough scale in local commerce to compete directly with retail giants like Amazon (NASDAQ: AMZN) and Walmart (NASDAQ: WMT).
Management is targeting $500 million or more in combined operational efficiencies, driven by cross-selling capabilities and a broad delivery network. Combining restaurant logistics with grocery fulfillment could allow a single driver to complete multiple, varied orders in a single trip, improving unit economics for the platform while offering consumers a single local commerce destination.
The projected closing window stretches into late 2027 or early 2028. That 18-month to 24-month horizon introduces substantial execution risk. While waiting for regulatory clearance, business conditions, consumer spending habits, and interest rates can shift dramatically, potentially altering the fundamental value of the assets involved.
Instacart executives also reported share sales in late October, although the transactions occurred under prearranged trading plans. Chief Executive Officer Chris Rogers executed two major sales, offloading 24,060 shares on Oct. 23 and another 24,665 shares on Oct. 26. Additional filings show Chief Financial Officer Emily Reuter selling 50,000 shares on Oct. 23 and Chief Legal Officer Morgan Fong selling 18,390 shares on Oct. 22. All three transactions occurred under Rule 10b5-1 trading plans established months earlier, so the timing alone does not suggest advance knowledge of the deal.
Left at the Door: Evaluating Standalone Realities
For investors holding either stock, the current environment requires weighing the downside risks if regulators ultimately block the transaction. DoorDash may be better positioned to withstand a failed deal. The company is operating at record volumes, its international expansion through Wolt continues to gain traction, and its core restaurant delivery business generates enough cash flow to support ongoing logistics investments. If the Instacart acquisition stalls, DoorDash would still have its established delivery operations and ongoing expansion efforts.
Instacart faces a more precarious setup. The company's recent earnings miss and subsequent decision to suspend forward guidance leave the stock lacking near-term catalysts outside of the acquisition narrative. The company has made commendable strides in building a high-margin advertising business, but without guidance, the market struggles to price that future growth. If regulators successfully challenge the merger, Instacart shares could lose some or all of the remaining acquisition premium attached to the $65 offer.
Investors considering a position in Instacart are currently balancing the potential upside between its share price and the $65 offer against the opportunity cost of tying up capital for potentially two years, alongside the distinct risk of a regulatory block. Cautious investors might prefer to monitor the initial federal commentary and early shareholder votes before committing capital, as the true odds of completion will become much clearer once the regulatory review officially begins.
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