US discount store retailer Target is planning to acquire the Alabama-based same-day delivery service provider Shipt for $550m in cash.

The transaction is expected to be completed by the end of this year, subject to customary closing conditions.

With the acquisition, Target intends to offer same-day delivery services at approximately half its stores by early next year.

“Partnering with Target and the national scale they provide allows Shipt to further accelerate our growth.”

The discount store retailer will be using Shipt’s technology platform, as well as its community of shoppers, to bring same-day delivery across the country.

Target noted that the acquisition would significantly accelerate its digital fulfilment efforts, and the service will be offered from the majority of Target stores, and in all major markets, before next year’s holiday season.

Target executive vice-president and chief operating officer John Mulligan said: “We laid out an ambitious strategic agenda in early 2017, which included a focus on giving our guests a number of convenient ways to shop with Target, whether it’s ordering online and picking up in one of our stores, driving up to pick up an order, or taking advantage of services like our new Restock programme.

“With Shipt’s network of local shoppers and their current market penetration, we will move from days to hours, dramatically accelerating our ability to bring affordable same-day delivery to guests across the country.”

Target will initially offer same-day delivery for products such as groceries, essentials, home and electronics. A larger product offering will be available at a later stage.

Upon completion of the deal, Shipt will be a wholly owned Target subsidiary and will continue to run its business independently.

Shipt founder and CEO Bill Smith said: “We are very excited to partner with Target, one of the most loved retailers in the country with a reputation for supporting local communities.

“Partnering with Target and the national scale they provide allows Shipt to further accelerate our growth, bringing our service to more people, in more markets across the country.”