Marks & Spencer has entered into a joint venture with Ocado Group to bring M&S’s ready meals, food hall favourites and Percy Pig sweets to online shoppers for the first time.
Under the 50-50 joint venture, M&S will take a 50% share of Ocado’s UK retail business, with access to the Ocado Smart Platform.
The £ 750 mn deal will give customers access to M&S branded goods at Ocado.com, and will also give Ocado access to Marks and Spencer’s 12 million customers and the data of its 7 million “Sparks” membership customers.
The venture will start operating after Ocado’s present deal to deliver Waitrose products expires in September 2020 and only 10% of the products at Ocado.com will be M&S-branded goods.
Shares of M&S fell 7 percent in early trading after the details of the deal were announced. The firm will launch a £ 60 mn rights issue and slash its dividend payout to shareholders by 40 percent in order to fund the deal.
Steve Rowe, Chief Executive, Marks & Spencer, said that he had “always believed that M&S Food could and should be online” and combining M&S’s food with Ocado’s technology and delivery network was a “win-win” and “compelling proposition to drive long-term growth”.
He added, “Our investment in a fully aligned joint venture with Ocado accelerates our food strategy as it enables us to take our food online in an immediately profitable, scalable and sustainable way.”
“The deal will mark a transformative moment in the UK retail sector that would combine two iconic and much-loved retail brands set to provide an unrivalled online grocery offer.” – Tim Steiner, Chief Executive, Ocado
Ocado will also continue to supply its own-label products and big name branded goods to offer more than 50,000 SKUs.
