*Ocado shares rise
Supermarket Morrisons and Ocado group have separately announced that they have reached a long term agreement with to begin grocery deliveries by January 2014. Shares in Ocado have rocketed on the news:
OCDO offering a buy one (albeit yesterday) and get 1/2 free. Shares +50% on MRW on-line tie-up— Mike van Dulken (@Accendo_Mike) May 17, 2013
The Morrisons.com website will be run from Ocado's new Dordon centre in the Midlands, with customer deliveries through a Morrisons liveried fleet. The deal will see Morrisons purchase the Dordon centre for an initial capital payment of up to £170m, with the supermarket making a further investment of £46m to expand the centre.
Dalton Philips, chief executive of Morrisons, said:
This agreement is a significant strategic step for Morrisons. From a standing start, Morrisons will be competing in the fast growing on-line channel by the end of this year with a really compelling proposition.
Last week Waitrose managing director Mark Price raised concerns that Ocado's talks with Morrisons could breach their existing deal (full article). Commenting on today's announcement Tim Steiner, chief executive officer of Ocado, said:
Our customers will see no change to the service they receive from Ocado as a result of this agreement. We will continue to source products under our long-term agreement with Waitrose.