Instacart Explores a Sale After Preliminary Talks With Uber and DoorDash

Instacart is exploring a possible sale of the company and has held preliminary discussions with Uber and DoorDash, The Information reported on Friday, October 23, citing people familiar with the matter. Bloomberg reported that the grocery delivery company has been working with an investment bank to weigh its options, and Reuters carried the report on Friday afternoon.

Shares of Instacart, whose legal name is Maplebear, closed about 9 percent higher on Friday. The stock spiked 9.2 percent shortly before the close, and the move put the company's market value at about $12 billion. Shares of Uber closed down nearly 3 percent, and DoorDash fell more than 4 percent.

The talks are early, and the reports differ on Uber

The discussions are preliminary, and there is no guarantee they will lead to a deal, The Information reported. Bloomberg gave a narrower account of the contact with Uber: Instacart recently approached Uber about a sale, Uber walked away, and the two sides are no longer in discussions, according to a person familiar with the matter. Instacart declined to comment when Reuters contacted the company. Uber and DoorDash did not immediately respond to requests for comment.

At a standard takeover premium of 30 to 40 percent, in line with recent public technology deals, Instacart would be valued at roughly $16 billion to $17 billion, The Information reported.

Why a buyer would want Instacart

A takeover by Uber or DoorDash would join Instacart's grocery marketplace and its ties with retailers to the buyer's delivery network and customer base, Reuters reported. Instacart also sells software to retailers for their own stores and websites, a business that runs alongside the delivery marketplace. A deal would add to a run of consolidation in food delivery. In July, Uber struck a deal worth nearly $15 billion to buy Delivery Hero of Germany, which created the largest food delivery group outside China.

The same scale that makes Instacart attractive would draw antitrust scrutiny. A sale to Uber or DoorDash would bulk up one of the biggest food delivery platforms in the United States, and regulators would weigh how much of the grocery delivery market the combined company would control before letting it proceed.

A far lower price than the 2021 talks

This is not the first time Instacart has been in sale talks. In 2021, DoorDash held talks to acquire the company in a deal that could have valued it at between $40 billion and $50 billion, The Information reported. Instacart was privately valued at $39 billion at the time. Those talks fell apart in part over concerns about whether a combination could win antitrust approval under the Biden administration.

The gap between that valuation and the $16 billion to $17 billion range in the current reports shows how far expectations have fallen since the pandemic years, when grocery delivery grew fast and private valuations climbed with it. What happens next depends on whether a buyer is willing to pay a premium and accept a long regulatory review, or whether Instacart stays independent and keeps building the retailer software side of its business.