The Four Sources Behind DoorDash’s $500 Million Instacart Target

TL;DR

• DoorDash will buy Instacart at $65 per share, an equity value of about $17 billion
• DoorDash’s CFO expects $500 million in net synergies in year three, from orders, ads, software and fulfillment
• Closing needs stockholder and antitrust approvals and is expected between late 2027 and mid-2028

DoorDash has agreed to buy grocery delivery company Instacart at an equity value of about $17 billion. The companies announced the deal in a joint release on Oct. 29. CFO Ravi Inukonda told analysts on DoorDash’s earnings call that he expects $500 million in incremental synergies, net of investments, in year three. The sources he named show what DoorDash is paying for.

More Orders and More Ad Spend

The first source Inukonda named is demand. DoorDash plans to list its restaurants on Instacart, and categories offered on only one platform can move to both. The second is advertising. Inukonda said consumer packaged goods (CPG) advertisers “will now have more consumers to reach,” leading to “higher ad spend” and, in turn, “more ROAS.”

Instacart’s third-quarter results show how large that business already is. Advertising and other revenue reached $331 million, up 23%.

Software and Fulfillment Sold to Grocers

The third source is software. Inukonda said Instacart “has built a really strong first-party software infrastructure,” which DoorDash can cross-sell to its own grocery partners. The fourth is fulfillment. DoorDash CEO Tony Xu said deliveries from its DashMart warehouses are “near perfect,” while third-party stores are “only in the low 90s” on accuracy.

When the Deal Is Expected to Close

The deal is expected to close at the end of 2027 or in the first half of 2028. Closing still needs Instacart stockholder approval, the end of the Hart-Scott-Rodino antitrust waiting period and approvals in Canada and Israel. Until then, the two companies operate separately.