Party in the USA: Ocado shares rocket on US push in tie-up with Kroger

Rebecca Smith
American Flags
Ocado has been ramping up its international ambitions with a new US tie-up (Source: Getty)

Ocado shares surged this morning on the news it had signed a partnership with US supermarket chain Kroger, marking its latest in a flurry of international deals.

Shares rocketed on the news, and were up 60 per cent by midday.

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

Ocado said those will offset in part the total fees expected to be agreed between the two parties.

Read more: Ocado shares rise on new international tie-up with Sweden's ICA

Tim Steiner, chief executive of Ocado, said:

The opportunity to partner with Kroger to transform the way in which US customers buy grocery represents a huge opportunity to redefine the grocery experience of Kroger's customers and create value for the stakeholders of both Kroger and Ocado.

As we work through the terms of the services agreement with Kroger in the coming months, we will be preparing the business for a transformative relationship which will reshape the food retailing industry in the US in the years to come.

Earlier this month, Ocado named Sweden's ICA for a tie-up involving its Ocado smart platform, and before that inked a deal with Sobeys in Canada in January, and an agreement with French firm Groupe Casino back in November.

Rodney McMullen, chairman and chief executive of Kroger, said:

We see Ocado as an innovative, exciting and transformative partnership in pursuit of our Restock Kroger vision, to serve America through food inspiration and uplift.

Our partnership with Ocado will speed up our efforts to redefine the food and grocery customer experience - creating value for customers and shareholders alike.

Ocado said it expects the earnings impact of this deal to be neutral for this financial year.

Read more: Ocado revenue rises despite weathering hit from snow disruption

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