A possible DoorDash-Instacart deal is all about keeping up with Walmart and Amazon, analysts say

What happened

The Wall Street Journal reported Monday that DoorDash was in advanced talks to buy Instacart in a deal valuing Instacart at roughly $17 billion. A deal could close as soon as this week, but talks could still fall through.

Confirmed

Global impact / market context

Buying Instacart would combine DoorDash's restaurant delivery with Instacart's grocery marketplace, giving the merged company more scale to compete with Walmart and Amazon, which have built large online grocery delivery networks.

Analyst inference

Instacart is losing some online grocery delivery business to Walmart and Amazon, according to Wedbush analysts. They said a deal makes sense because restaurant delivery plus a grocery marketplace could be a critical combination against those retail giants.

Analyst inference

What to watch

1. Instacart shares finished 7.9% higher on Monday after the report, showing investors reacted positively to the possibility of a $17 billion takeover by DoorDash. Confirmed
2. Watch whether the two companies announce a formal agreement this week, since the Journal said a deal could be wrapped up as soon as this week but talks could still fall through. Proposed
3. Watch how Walmart and Amazon respond, since Wedbush analysts see the combined company aiming to compete directly with their rapidly built online grocery delivery networks. Analyst inference

Evidence

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