Investors battered Ocado and Marks & Spencer’s shares this morning as the supermarkets finalised details of a £1.25bn partnership.
M&S’s share price fell 4.5 per cent while Ocado’s share price dropped as much as 4.4 per cent as M&S completed the £750m purchase of a 50 per cent stake in Ocado’s online delivery platform.
The pair have been in talks over the deal since at least February.
It will see Ocado replace Waitrose products with M&S goods from September 2020, though the switch could come earlier if Ocado’s Waitrose deal ends early.
Ocado today appointed M&S strategy director Melanie Smith as chief executive of the joint venture, called Ocado Retail.
Ocado Retail’s interim MD, Lawrence Hene, will serve as her deputy for a “transitional period”.
Tim Steiner, Ocado CEO, will also serve as chair and a director of the tie-up.
He said: “Ocado Retail’s future, as part of a joint venture with M&S, is full of opportunity. The new company will be able to offer customers even greater range, service, quality and value.
“Our collaboration will also allow us to grow the business faster, add more jobs, and create more value for all our stakeholders. We are very excited to be working together.
“I am very excited about Ocado Retail Limited continuing to realise its fullest potential under Melanie’s leadership.”
Other directors will include Ocado CFO Duncan Tatton-Brown, M&S food managing director Stuart Machin and M&S boss Steve Rowe.
“I have always believed that M&S Food could and should be online,” Rowe said.
“The addition of Ocado to our family of businesses marks M&S’s first truly transformational step in shaping our future as a digital first retailer, as we combine the magic of M&S food with Ocado’s award-winning service to create a new and compelling proposition.”
The controversial partnership saw M&S ask investors to take a hit for the supermarket to fund the venture.
M&S reset its dividend by 40 per cent – leaving investors with a final dividend of 7.1p per share for 2018-19, 62 per cent lower than the 18.7p it paid in 2017-18.