Ocado signs partnership agreement with United States giant Kroger

Ocado's shares closed 45 per cent higher on Thursday

Mo Aldalou 7:43am 18th May 2018 Ocado's shares closed 45 per cent higher on Thursday

The alliance will bring to the US for the first time the unparalleled technology underpinnings of the Ocado Smart Platform, which includes online ordering, automated fulfillment and home delivery capabilities.

Ocado, which already works with Sweden's ICA, Canada's Sobeys and France's Casino (as well as Morrisons in its home market), said it had agreed a contract that could see Kroger open up to 20 automated warehouses in the USA over the next three years.

Ocado was created in 2000 in the UK.

Shares in Ocado (OCDO) rocket 43% higher to 787.9p following the announcement of a tasty partnership with USA grocer Kroger, giving the online grocer-to-e-commerce tech licensor a foothold in the vast groceries market across the pond.

The two companies said they were already looking for sites for their first three warehouses and planned to identify up to 20 within the first three years of their deal. Ocado added that, in the event of a failure to commit to the target capacity, Kroger will pay compensation to Ocado.

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The deal boosts Kroger's stake in Ocado, whose shares popped more than 50 percent in premarket trading, by 5 percent to 6 percent.

The deal should help Kroger compete with Amazon, which has entered the grocery delivery market in a big way.

Rodney McMullen, Kroger's chief executive, said the partnership would the grocer "redefine the food and grocery customer experience - creating value for customers and shareholders alike".

Russ Mould, investment director at AJ Bell, comments: 'A United States licensing deal helps extend the astonishing momentum displayed by internet-based groceries business Ocado since the company shifted its focus from being a simple online supermarket to a technology platform provider.

The deal is the fourth major agreement Ocado has signed in six months, after striking partnerships with France's Groupe Casino, Canada's Sobeys and Sweden's ICA Gruppen.

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