Ocado completes a long-awaited international deal adding £300million to its value
OCADO finally delivered a long-awaited international deal yesterday and signalled more to come, sending its shares soaring 20 per cent.
Ocado secured a long-awaited international deal adding over £300million to its value
More than £300million was added to the value of the FTSE 250 online grocer on the back of a tie-up with French supermarket giant Groupe Casino to develop its online food business.
As part of the agreement, a robot-run warehouse will be built to serve Paris and North-west France, while Groupe Casino’s brands, including Monoprix, will use Ocado’s digital software.
Ocado, which has come under pressure to make good on its overseas expansion ambitions having already missed a self-imposed deadline, expects the tie-up to create “significant long-term value”.
The impact on this year’s earnings is “minimal”, while next year the costs of setting up the partnership will offset initial fees payable to it.
Ocado was set up in 2000 by three former Goldman Sachs bankers
We expect this deal to be one of many successful collaborations with leading retailers
Ocado, set up in 2000 by three former Goldman Sachs bankers including CEO Tim Steiner, already has agreements with Waitrose and Morrisons in the UK.
It is set to spend an extra £15million over the next year to accelerate the development of the platform, with further investment in future years.
Shares in the company, which floated at 180p in 2010 and made its first annual profit two years ago, jumped 53¼p to 309½p.
Steiner said: “The solutions provided by the Ocado smart platform will allow retailers such as Groupe Casino to build their online grocery offer in a way that is profitable and sustainable, creating value for customers, suppliers and shareholders.
Ocado still structural winner in online grocery: Analyst
"We expect this deal to be one of many successful collaborations with leading retailers.”
Neil Wilson, senior market analyst at ETX Capital, said the “transformative” deal would expose Ocado to a large chunk of the French market, where Casino has an 11 per cent share.
Shore Capital’s Clive Black said: “We believe that Ocado is developing the most advanced and economic end-to-end platform for third-party retailers, a view validated by this deal, and expect it to sign multiple deals in the coming years.”