Ocado shares rocket on Kroger tech deal

The online grocer signs a deal to supply its technology with US retail giant Kroger.

Ocado delivery van

Shares in online grocer Ocado have surged by 60% after it struck a deal with US retail giant Kroger.

Ocado's technology will be used in the US exclusively by Kroger, which is one of the world's biggest grocery chains with annual sales of $122bn (£90bn).

Under the terms of the deal, Kroger will also take a 5% stake in Ocado.

The agreement is the latest in a series of deals that Ocado has struck with retailers to share its technology that automates online grocery orders,

The Kroger deal is the fourth agreement Ocado has reached in six months, and marks its first foray into the US.

Shares in Ocado had jumped by 334p, or 60%, to 886p by midday.

Ocado and Kroger are already looking to identify the first three sites for automated warehouse facilities in the US, and are aiming for up to 20 sites over the first three years of the agreement.

As the deal with Kroger is exclusive, Ocado said it would now end talks with other US-based retailers.

In the past few months, Ocado has struck deals to share its technology with Groupe Casino in France, Sobeys in Canada and ICA Group in Sweden. It also operates the online business of the UK's fourth largest supermarket, Morrisons.

'Ocado is making great strides in the global grocery market," said Laith Khalaf, senior analyst at Hargreaves Lansdown.

"The company is known in the UK as an online supermarket, but that's just the tip of the iceberg, as Ocado is primarily a technology and logistics firm with the potential to license out its services to grocers around the world.

"Indeed there seems to be a bit of a queue forming, made up of those who want to play catch-up in the digital retailing age, and consequently Ocado now has a foothold in the hugely important US market, as well as the UK, France and Canada."




Date: 17 May 2018 | Source: BBC

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