M&S & Ocado shares rise amid rumoured food delivery deal

M&S Ocado
// The two grocers in talks over a deal where M&S could buy key distribution centres from Ocado
// M&S shares rose 2.6%
// Ocado shares rose 6.7%

Shares in Marks & Spencer and Ocado saw a sharp increase this morning amid reports that the two retailers are in discussions over a potential deal.

According to The Mail on Sunday, there have been talks between M&S and Ocado over a deal for the former to buy key distribution centres, delivery vans and lorries from the latter.

In response to the news, shares in M&S rose as much as 2.6 per cent, while shares in Ocado rose by 6.7 per cent.

Ocado currently has a supply and delivery contract with Waitrose – the John Lewis Partnership-owned grocer – that runs until 2020.

The Mail on Sunday reported that the new deal means M&S could effectively replace the Waitrose part of the Ocado business.

As an online-only grocer, Ocado is expected to increase by 52 per cent over the next five years to £17.3 billion according to industry researcher IGD.

Ocado has been trying to sell its proprietary technology to international supermarkets in the past few years, with new deals seen as key to the company’s valuation.

While M&S’s shares are down five per cent year-on-year, Ocado’s shares have doubled as a result of its four major overseas partnership deals which has taken its market capitalisation to about £6.6 billion.

M&S’ grocery division currently only sells wine and flowers online as well as clothing but does not offer a full food delivery service.

However, it has been conducting trials since 2017 as it acknowledged the growing online part of the industry.

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