Ocado shares have soared almost 45 per cent, adding £1.6 billion to the online grocer’s stock market value and making it worth more than Marks & Spencer.
Shares in Ocado surged to almost 800p yesterday on the back of its announcement of a tie-up with US-based grocer Kroger, the world’s third-largest retailer with nearly 2800 shops across 35 states and annual sales of $122 billion (£90 billion) in 2017.
At one stage, Ocado shares jumped 81 per cent to £10 but it closed at 797.2p, valuing the online grocery business at £5.3 billion.
This means the London-listed company is now worth more than retail bellwether M&S, which is valued at £4.8 billion.
Ocado could also now climb into the FTSE 100 index of Britain’s biggest companies, which will have its next quarterly reshuffle at the end of this month.
As part of its new agreement, Ocado’s fifth internationally, the retailer’s technology will be used in the US exclusively by Kroger.
Kroger will also take a five per cent stake in Ocado and pay a monthly exclusivity and consultancy fee as part of the tie-up.
The two retailers are now in the process of identifying three sites across the US for the development of new “automated” warehouses this year.
This will be increased to a total of 20 over the first three years of the agreement.
Ocado founder and chief executive Tim Steiner said the tie-up was “transformative”.
“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,” he said in yesterday’s announcement.
The Kroger deal is the latest in a string of overseas partnerships Ocado has struck in the past year, after coming under pressure from investors over a delay in securing international deals after missing a self-imposed deadline of the end of 2015.
Other deals so far locked in by Ocado include one in France with supermarket giant Groupe Casino, in Canada with Sobeys and in Sweden with ICA.
Ocado was founded in 2000 but it wasn’t until 2010 that it first floated on the stock market, at 180p a share.