American online food delivery company DoorDash is nearing a $17 billion deal to acquire grocery delivery rival Instacart, saying the acquisition would expand options for customers.

The deal was announced on Thursday.

DoorDash noted that it would take up to a year to finalise it, with Instacart customers expected to have access to buy from 150,000 stores, up from the current 100,000. 

“Together, we can accelerate innovation across the grocery industry and make online grocery more seamless and affordable for the millions of households we serve,” Instacart chief executive officer Chris Rogers said. 

He added, “Over the last 14 years, Instacart has transformed online grocery by helping retailers of all sizes compete and grow, and joining forces with DoorDash allows us to do even more.”

Instacart was founded in 2012 but went public in 2023 and instantly enjoyed post COVID-19 boom, but the company has struggled to surpass other competitors such as Uber, Amazon, and Walmart. 

DoorDash chief executive officer Tony Xu, however, assured that both companies would leverage their expertise in grocery and food delivery to improve the customer experience.

“Grocery is one of the hardest things to get right online. Someone has to pick a ripe avocado, find a substitute you’d choose yourself, and get the ice cream to you before it melts,” Mr Xu said.

He added that “Instacart has spent years learning to do that well for grocers, while DoorDash has built a delivery network and technology that local stores rely on every day.”

DoorDash noted that the agreement would see the company acquire Instacart at $65 per share, representing a 26 per cent premium on Instacart’s closing share price on 22 October, with at least 75 per cent of the deal expected to be paid in cash.