Ocado: Another Deal to Squeeze Bears

Ocado's shares closed 45 per cent higher on Thursday

Ocado has signed an exclusive partnership with America's second-biggest supermarket chain - sending the United Kingdom online grocer's shares to record levels.

Shares in online grocer Ocado surged nearly 50% to 790p, adding £1.5bn to its stock market value, taking it above £5bn for the first time, as investors cheered the news.

It also said that Kroger, which recorded sales of US$122bn during 2017, making it the largest grocery retail chain in the United States in terms of revenue, was best placed to retain that market-leading position.

Kroger has almost 2,800 shops across 35 USA states and annual sales of $122bn in 2017.

Kroger demonstrated its commitment to the Anglo-American alliance by subscribing for 33.1mln Ocado shares worth £183mln, which would give it a 5% share of the United Kingdom business.

Tim Steiner, Ocado's chief executive, said the deal would be "transformational" and "reshape the food retailing industry in the U.S. in the years to come".

"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 USA in the years to come".

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"He added: "[It] represents a huge opportunity to redefine the grocery experience of Kroger's customers and create value for the stakeholders of both Kroger and Ocado". (KR), under which Kroger will use Ocado's technology in the USA for grocery and other food-distribution activities.

Earlier this month, it inked a deal to build Swedish supermarket ICA's online grocery business and it also has finalised deals with Canadian grocery Sobey's and french supermarket company Groupe Casino.

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

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

"Ocado is making great strides in the global grocery market, and inflicting serious financial pain on those who have bet against it", Khalaf said.

Remember too, Ocado counts Morrison Supermarkets PLC (LON:MRW) as one of its customers, having run the technology and delivery network for the Bradford-headquartered supermarket chain's online operation since it launched in 2014.

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

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