Is DoorDash Still Thinking About Buying Instacart? Deal Has Stalled

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Aug. 12 2021, Published 12:42 p.m. ET

Delivery services have been a major talking point during the COVID-19 pandemic era, with brands like Amazon (NASDAQ:AMZN), UPS (NYSE:UPS), and Walmart (NYSE:WMT) taking center stage for their core e-commerce and delivery models. However, other companies like DoorDash (NYSE:DASH) and Instacart have also played a pivotal role in the COVID economy—and it doesn't look like the trend is halting.

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With recent growth in tow, DoorDash executives met with folks from Instacart to discuss a potential acquisition. Has the conversation progressed, and will Instacart become part of the DoorDash portfolio?

What to know about the DoorDash and Instacart meetings

According to The Information, sources close to the matter reported that DoorDash and Instacart executives have met multiple times over the last two months. The conversation centered around a potential Instacart acquisition for the public company DoorDash. Reportedly, DoorDash valued Instacart at around $50 billion–60 billion.

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Earlier this year, Instacart completed a funding round worth $265 million, which brought the corporate valuation to $39 billion. Founder Apoorva Mehta also joined billionaire territory thanks to that funding round.

Meanwhile, DoorDash maintains a $62.27 billion market capitalization as of Aug. 12. The company was worth $38 billion once its IPO hit the market. Realistically, the two companies have similar valuations. Their services differ slightly because Instacart works with grocery stores while DoorDash focuses on restaurant food delivery. Because of this, the two could be synergistic rather than competitive.

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The acquisition conversation between DoorDash and Instacart might have stalled.

DoorDash and Instacart have paused conversations about a potential acquisition deal for the time being. Reports suggest that a lot of the hesitation has to do with concern about antitrust regulation.

This is a realistic concern. While the U.S. government hasn't been anywhere near as hard and fast as Chinese regulators on a monopolistic breakdown, the new FTC chair Lina Khan is undeniably strict on antitrust. Khan has a bone to pick with big tech. Frankly, it's wise for DoorDash and Instacart executives to understand that they aren't immune from regulators' reach.

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What other companies has DoorDash acquired?

DoorDash has acquired five companies during its history:

  1. Chowbotics

  2. Scotty Labs

  3. Caviar

  4. lvl5

  5. Rickshaw

Granted, none of these companies are popular in the same way that Instacart is. An acquisition like this would dramatically increase DoorDash's corporate valuation.

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Right now, the conversation remains entirely speculative and neither company has taken concrete steps to suggest that the acquisition will proceed. The hesitation says a lot about the state of antitrust in the U.S. It could also suggest that companies like DoorDash that have major growth but lack profit aren't as unwavering as executives might think.

If DoorDash buys Instacart, it's an easy way into the public market for the grocery delivery company.

Instacart remains a privately held company. If a public company like DoorDash purchases the brand, that will change. However, an investment into Instacart must be made by direct consumerism, at least for the time being (as if we needed another excuse to get our groceries delivered).

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