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

Ocado and Kroger to build online network

Ocado' s biggest deal to date, is the latest in a series of tie-ups by the online retailer.

Now, the two companies are working to identify the first three sites for the development of new, automated warehouse facilities and will identify up to 20 sides over the first three years of the agreement.

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".

The online supermarket said the deal means Kroger will take a five per cent stake in the company and gives the U.S. business the rights to use Ocado's technology for grocery and other food distribution related activities in the USA on an exclusive basis, in return for "monthly exclusivity and consultancy fees".

Ocado has signed an exclusive partnership with America's second-biggest supermarket chain - sending the United Kingdom online grocer's shares to record levels. It has struck partnerships with Groupe Casino in France, Sobeys in Canada, and ICA Group in Sweden.

"It could also lose exclusivity rights, so (it) appears Ocado has given itself some options should this not go as well as planned".

"The company is known in the United Kingdom 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".

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Ocado chief executive Tim Steiner said working with Kroger to transform the way in which U.S. customers bought groceries represented "a huge opportunity to redefine the grocery experience" for Kroger customers.

The shares, which have more than tripled in value over the previous year, were changing hands for 925p each, up 68% on the day.

For CEO Steiner Thursday has been very profitable with his stake in the business he founded worth £250mln, making him £100mln richer.

"The short sellers were hoping Ocado wouldn't deliver on its global expansion plans".

Instead, it has taken the fight to the opposition with more than a little success.

One suspects the momentum will continue to work against the men and women in dark glasses as the hedge funds and proprietary trading desks look to cover their positions.

All in Numis got it spot on: this is a big deal...for everyone involved.

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