DoorDash to acquire Instacart for $17 billion

DoorDash will acquire Instacart for $17 billion, the companies announced Thursday.

Shares of DoorDash jumped more than 8% higher in premarket trading following news of the deal, while Instacart traded near the flatline.

Speculation of a deal has swirled since last week, when The Information reported Instacart was exploring a sale and had held talks with companies including Uber and DoorDash. On Monday, several outlets reported DoorDash was in advanced discussions to acquire Instacart and that the deal could value Instacart at about $17 billion.

Sources familiar with the matter had told CNBC that the deal could be announced as soon as Thursday morning.

Acquiring Instacart would give DoorDash a bigger presence in online grocery delivery. DoorDash got its start in food delivery, and since then it has added more retailers to its marketplace, such as Sephora, Macy's , Staples and Anthropologie. In recent months, it's brought on a growing stable of regional grocers, after announcing a partnership with Kroger last year.

Instacart, which went public in 2023, was one of the biggest beneficiaries of a pandemic-driven surge in grocery delivery services, but it has struggled to maintain that momentum. In December Instacart agreed to pay $60 million to settle allegations by the Federal Trade Commission that it misled users with false advertising and deployed "unlawful subscription enrollment" practices.

The service has also faced increasingly stiff competition from companies like Amazon and Walmart . After slowing its brick-and-mortar grocery effort, Amazon has doubled down on its online grocery business and leveraged its vast fulfillment footprint to speed up deliveries of household essentials, pantry staples and perishables.

Both Amazon and Walmart have pushed further into same- and next-day delivery, which poses a threat to Instacart's on-demand delivery model.

Analysts have noted that a potential combination of Instacart and DoorDash could attract antitrust scrutiny given the companies' market overlap.

Third-party delivery platforms "remain a minority of total grocery consumption, but slicing and dicing the online market more narrowly or from a perspective of the grocers as enterprise customers can make approvals more challenging," Wedbush analysts wrote in a Monday research note.