Ocado Dismisses Takeover Talk

Posted on 7 July, 2013 by MOVEHUT

Online grocer Ocado has announced it is in talks over tie-ups with other retailers following its £170 million deal with WM Morrisons, but denied receiving a takeover approach for its own business.

The retailer, which has never made an annual profit, revealed it had been in talks with other interested parties looking to move online, although these are thought to be international companies.

Tim Steiner, the chief executive said: “We have had approaches and these conversations are ongoing. However, at the moment it is about delivering our existing arrangement with Morrisons to help launch and operate their online grocery business.”

Shares in Ocado have more than tripled this year, helped by the 25-year link-up with the supermarket chain Morrisons. Announced in May, it will see the supermarket invest £46 million in Ocado’s Dordon distribution centre as well as making an initial payment of £170 million to the online grocer.

Although this has not gone down well with the online grocers’ original partner Waitrose, which can stop its current deal in 2017, experts now believe the company is well positioned to export its technology across the globe.

Steiner responded to rumours that a suitor such as Amazon could make a bid for Ocado. He said: “Our stock price has moved and people are looking for the elephant in the room, but I can tell you there has been no take-over approach.”

News of the tie-up talks came as Ocado revealed it had fallen into the red during the first half of the year, posting a £3.8 million loss compared to a £0.2 million pre-tax profit in 2012.

Steiner said the figure had been impacted by £2.8 million advisory costs, including fees of £1.3 million from the Morrisons deal and the rest from opening two new warehouses. However sales rose by 15.6 per cent to £355.9 million.

Steiner added: “It’s not inevitable that Waitrose will break its deal with us.”

In fact the deal with Morrisons will enable us to invest in our platforms to benefit all of our customers.”

Shares in Ocado fell 6.6 per cent to 305.6p following the latest update. One of Ocado’s harshest critics, Shore Capital analyst Clive Black, maintained his selling rating but praised the recent appointment of former Marks & Spencer boss Sir Stuart Rose as the company’s chairman. “For the way he has engineered seeming change in the group’s prospects,” he said.

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