Kroger paying $247M to license Ocado online home-delivery technology


Kroger is one of the world's biggest grocery retailers, and a market leader in the USA, with sales in fiscal 2017 of $122bn. 'This is clearly a transformative deal for Ocado, and one that is on a completely different scale to those announced in the past'.

The shares jumped 62% to 894.6p on news of the tie-up with the largest supermarket chain in the US, Ocado's fourth global deal with a supermarket in the last six months.

As part of the deal, Kroger will take a stake in the British company, equivalent to 5 percent of the existing share capital valued at 183 million pounds, Ocado said.

The shares were first listed in 2010 at 167p.

"Ocado's unique, proprietary and industry-leading technology is set to transform the shopping experience of consumers around the world", he commented.

US-based retailer Kroger will be using Ocado's Smart Platform technology to power its online food and grocery deliveries. It has struck partnerships with Groupe Casino in France, Sobeys in Canada, and ICA Group in Sweden. Our success as a retailer shows that we can offer customers unrivalled choice, quality and convenience, efficiently and profitably.

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'The objective of this partnership is to allow Kroger to redefine the grocery customer experience in the U.S. through the adoption of the centralised, automated model of online retailing provided by the Ocado Smart Platform, ' Ocado said in a statement.

"This is a sign that the momentum is very much behind Ocado in terms of its worldwide expansion".

James Zimmerman, the best performing manager in Citywire's UK Smaller Companies sector over the a year ago, holds 2.8% of his £297 million Jupiter UK Smaller Companies fund in Ocado, his third largest position.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said that as one of the most shorted stocks in the United Kingdom - where investors bet that a firm's share price will fall - Ocado's deal with Kroger was a "poke in the eye" for the hedge funds who have bet against it.

"Bagging a giant USA retailer is a major coup for Tim Steiner and as previously noted, we should see many more deals".

"This is a big deal, ' said Numis analyst Andrew Wade, who rates the shares a 'buy". "The market reaction was exceptionally bullish with shares jumping by 40% in early trade on the announcement".