A report that the grocery-delivery company is exploring a sale and has held early talks with DoorDash and Uber appeared at 3:54 p.m. Instacart's shares broke higher that minute. Most of the would-be buyers' declines came before it.
For most of Friday, Instacart's stock barely moved. Then, with six minutes left in the session, it did.
At 3:54 p.m. Eastern, The Information reported that Instacart, whose parent company is Maplebear Inc., is exploring a sale, has been working with an investment bank to weigh its options and has held at least preliminary conversations with DoorDash and Uber, citing people familiar with the matter. The discussions are ongoing and may not lead to a deal, the report said.
Instacart declined to comment. Uber and DoorDash did not respond to requests for comment. None of the three has issued a statement or filing on the matter. Later on Friday, Bloomberg News reported that Uber had walked away from discussions after Instacart shopped itself to the company, and that the two sides were no longer talking.
The tape, minute by minute
Instacart's shares traded between $51.19 and $51.65 from 3:30 p.m. to 3:53 p.m., closing that minute at $51.29. In the 3:54 p.m. minute, the stock jumped as high as $54.10 on 2.3 million shares. It peaked near $57.85 in the following minutes and closed at $56.44, up 9.2% on the day and about 10% above its price just before the report.
About 10.4 million shares changed hands in the final six minutes, against 3 million for the whole of Thursday's session. Some of that volume was the normal closing auction, which coincides with the final minutes of trading.
The buyers' declines came first
Uber closed down 3.4% and DoorDash 3.5%, and several accounts set those losses next to the Instacart report. The timing does not support that link. By the 3:50 p.m. mark, before the report, Uber was already down 3.2% and DoorDash 2.8%. After it, Uber slipped another 0.3% and DoorDash another 0.8%.
What caused the earlier declines is unclear. Friday was a weak day for consumer-facing stocks, with the consumer discretionary sector down 1.7%.
What the price implies
At Friday's close, Instacart was worth about $13.4 billion. The report said a typical takeover premium of 30% to 40% would value the company at roughly $16 billion to $17 billion, based on recent public technology deals. That range would sit about 19% to 27% above Friday's close.
The gap suggests the market is pricing a probability, not a deal. Investors are paying up for the chance of a takeover while discounting the risk that talks fail.
The stock had also risen before Friday. It climbed about 20% between Sept. 30 and Oct. 22, so some anticipation may already have been in the price.
The antitrust history
This would not be the first attempt. DoorDash held talks to buy Instacart in 2021, when Instacart was privately valued at $39 billion. Those talks fell apart partly over concerns about whether a combination could win antitrust approval, according to the report.
The same question applies now. Either buyer would combine two of the largest delivery platforms in the U.S. Uber also has a large deal of its own pending: in July it agreed to buy Germany's Delivery Hero for nearly $15 billion.
A credible process or a long shot
The bullish reading is that a bank-assisted process with at least one logical strategic buyer still engaged is a real path to a premium, and that the regulatory climate may differ from 2021. Friday's close still leaves room below the report's premium math.
The skeptical reading is that the talks are preliminary, unconfirmed by any party, and run straight into the same competition concern that ended the last attempt, with Uber reported to have already walked away and DoorDash the obvious remaining candidate.
What to watch
Monday's session, the first full day of trading on the report, and whether the stock holds near $56. Any statement from Instacart, Uber or DoorDash. Questions on Uber's and DoorDash's upcoming earnings calls, and Instacart's own third-quarter results after the close on Nov. 5.