Grocery delivery giant Instacart exploring sale to larger rivals
What's the story
Instacart, a leading grocery delivery service, is reportedly considering a sale to larger competitors. According to The Information, the company has hired an investment bank to explore its options and has had acquisition talks with DoorDash. Bloomberg also reported that Instacart held discussions with Uber but those talks have since ended.
Financial standing
Instacart's stock price has risen by 25% this year
With a market cap of over $13 billion, Instacart's stock price has risen by 25% this year.
The company may be looking to sell at an attractive price before the grocery delivery market becomes more competitive.
However, these are still early talks that may not lead to a sale, Bloomberg noted.
Acquisition value
Potential sale could fetch between $16 billion and $17 billion
If a buyer pays a 30% to 40% premium, Instacart's potential sale could fetch between $16 billion and $17 billion, The Information reported.
This comes as Uber and DoorDash are expanding their grocery delivery businesses and pursuing multibillion-dollar acquisitions in the food delivery industry.
However, any takeover by either company could face antitrust scrutiny due to their competing grocery delivery operations.
Past negotiations
Antitrust concerns previously derailed DoorDash's acquisition talks with Instacart
Antitrust concerns previously derailed DoorDash's 2021 discussions to acquire Instacart at a valuation of $40 billion-$50 billion.
The talks broke down partly over fears of securing regulatory approval during the Biden administration.
In terms of financial performance, Instacart generated $480 million in free cash flow in Q2, with revenue rising 14% year-on-year (YoY) to just over $1 billion.