«Breaking News» M&S confirms talks with Ocado about a tie-up that would see the stalwart finally sell food online

Marks & Spencer is considering launching a national online grocery delivery business through a tie-up with Ocado, it has confirmed.

Speculation about a possible deal between the High Street stalwart and Ocado emerged last month, but neither company would confirm or deny reports.  

In a statement to the stock market today, however, the UK retailer said that 'it is in discussions with Ocado Group plc regarding a joint venture in UK Retail'.

M&S said it is in talks with Ocado about a joint venture that would enable it to sell food online

But it added: 'There is no certainty that these discussions will result in any agreement or as to the timing of any such agreement.'

M&S shares rose 4 per cent to £3.04 on the news, while Ocado shares jumped 12.5 per cent by lunchtime. 

A report in the Evening Standard suggested that the tie-up could be announced as soon as Wednesday, with M&S paying up to £900million for a 50 per cent stake in the venture.

If a deal goes ahead, M&S would finally be joining the ranks of its grocery rivals, many of which launched online delivery businesses at the turn of the millennium. 

The mooted deal would involve Ocado dumping existing partner Waitrose – a severing of ties that would send shockwaves though the upmarket grocer's heartland in the South of England.

 Ocado's contract with Waitrose, which is coming up for renewal, has added time pressure to the negotiations. The company will need to trigger an 18-month break clause with the supermarket by the end of this week in order to walk away from its longstanding partner.

The potential deal with M&S was first reported in late January, prompting a rise in Ocado's share which was later wiped out when a fire broke out at its Andover warehouse, denting its sales expectations.

Reacting to confirmation that the companies are in talks, Bernstein analyst Bruno Monteyne said the joint venture structure would be beneficial for Ocado, which still uses its retail business to demonstrate the capabilities of its technology.

He added that M&S could be a useful partner for the launch of Ocado Zoom, a one-hour delivery service. 

'Ocado Zoom could be a major growth path for Ocado,' he said. 'We believe the food of M&S (ready meals, quality food) is perfectly suited for this more upmarket convenience shopping. M&S would boost the potential of Zoom in the UK.' 

Reports have said that Ocado founder Tim Steiner has offered to sell his key distribution centre at Hatfield and Ocado's fleet of refrigerated vans and lorries to M&S for a sum of around £850million.

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Link hienalouca.com

https://hienalouca.com/2019/02/26/ms-confirms-talks-with-ocado-about-a-tie-up-that-would-see-the-stalwart-finally-sell-food-online/
Main photo article Marks & Spencer is considering launching a national online grocery delivery business through a tie-up with Ocado, it has confirmed.
Speculation about a possible deal between the High Street stalwart and Ocado emerged last month, but neither company would confirm or deny reports.  
In a st...

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