DoorDash acquires Instacart for $17 billion

DoorDash announced on Thursday that it will acquire Instacart for $17 billion, uniting one of the nation's top grocery delivery services with a major food delivery company.

DoorDash will pay $65 per share for Instacart, and the acquisition will benefit communities by enabling more supermarkets to use Instacart's platform to run their websites.

Instacart, founded in 2012, specializes in grocery and convenience store delivery in the U.S. and Canada. DoorDash, founded a year later in San Francisco, expanded into grocery delivery in 2020 amid a pandemic-induced surge in demand.

The acquisition is expected to strengthen DoorDash's grocery delivery services, making it a more potent competitor to Amazon and Walmart.

DoorDash's most recent earnings report, released on Wednesday, shows its revenue grew 34% from a year ago. Its total number of orders rose 28%, indicating continued growth in the highly competitive delivery business.

The deal comes amid industry consolidation, with Instacart's market share declining from 26% to 18% over the past five years, according to Consumer Edge.

Federal regulators are scrutinizing pricing practices. The Federal Trade Commission on Thursday said it has opened a probe into DoorDash and Instacart, along with seven other companies across retail and transportation, to examine how they set prices.