Deals

Instacart Owes DoorDash $650 Million If It Takes A Better Bid; DoorDash Owes $1.25 Billion If Regulators Block The Deal

The pending merger carries a $650 million breakup fee, a $1.25 billion regulatory fee and a $65.00-per-share cash price.

Instacart must pay DoorDash $650 million if it walks away for a superior offer, and DoorDash must pay Instacart $1.25 billion if the merger dies under specified regulatory circumstances, according to a Thursday filing on the pending deal. Instacart, which does business as Maplebear, makes the technology that lets shoppers order groceries online for delivery or pickup.

Two fees, two kinds of risk

The merger agreement, signed October 28, says Instacart pays the $650 million if it terminates to accept a superior proposal or if DoorDash walks after the Instacart board changes its recommendation. If stockholders vote the deal down, Instacart must reimburse DoorDash expenses of up to $25 million, an amount credited against any later breakup fee.

The $1.25 billion runs the other way: DoorDash pays it in cash if the agreement ends under specified regulatory-related circumstances.

Instacart can still engage with an unsolicited superior proposal before its stockholders vote. D1 Capital Partners and Sequoia Capital Operations signed agreements to vote their shares for the merger, and a joint press release attached to the filing puts the supporting holders at 19% of outstanding stock.

What Instacart holders get

Holders can elect $65.00 in cash per share, 0.3372 DoorDash Class A shares, or a mix of $48.75 in cash plus 0.08430 shares. Shares with no election receive cash. Proration caps the stock portion, so some holders who ask for stock may get cash instead.

Unvested Instacart stock units convert into DoorDash restricted stock units, while vested units are cashed out at $65.00 per share.

Instacart shares hit a record $62 on Monday after reports that DoorDash was nearing a takeover, Reuters reported. The company's market value was $13.9 billion as of Thursday morning.

Antitrust conditions and the clock

Closing requires clearance under the Hart-Scott-Rodino antitrust law, Canada's Competition Act and Israel's competition law. The agreement runs 12 months to an outside date, with up to four automatic three-month extensions if only antitrust conditions remain open.

DoorDash must pursue remedies regulators demand, except those amounting to a Regulatory Material Adverse Effect. It also committed to specified pledges to grocers, merchants and consumers, which do not count toward that test.

DoorDash intends to file a Form S-4 registration statement that will contain Instacart's proxy statement for the stockholder vote.

Instacart also said Monday it will wind down its Caper Cart smart-cart business by the end of the second quarter of 2027, with pre-tax charges of $55 million to $80 million.