Markets

Kroger paying $247M to license Ocado online home-delivery technology

Kroger paying $247M to license Ocado online home-delivery technology

U.S. retailer Kroger has signed a landmark deal with Ocado to use its technology for grocery deliveries, marking the British online grocer's first entry into the United States.

Kroger, the largest US supermarket chain by revenue, operates about 2,780 supermarkets in the USA and has some 443,000 employees.

The threat of a big disruptor entering the sector has put pressure on food retailers to be on top of their game when it comes to online deliveries, and that's playing into the hands of Ocado, with a number of deals in the pipeline now coming to fruition.

Under the terms of the deal, Kroger has discontinued discussions with other retail tech firms, will pay Ocado a monthly consultancy fee and is to acquire a five per cent stake in Ocado.

Ocado, which powers Morrison's (MRW) online delivery service in the United Kingdom, believes Kroger is the company best positioned to win in USA grocery and having inked this deal, will now call off talks with other US-based retailers.

Britain's online supermarket Ocado clinched a game-changing deal with Kroger as its exclusive partner in the USA, securing its entry into the world's biggest market and sending its shares up 50 percent.

Omo-Agege, Ndume Summoned Over Mace Theft
The lawmaker representing Delta Central Senatorial District, Senator Ovie Omo-Agege, was at the Senate chamber this morning. The Senate said its decision was in deference to a court judgment which nullified Omo-Agege's suspension.

The companies will find three locations for new warehouses this year and said they would find locations for a total.

Ocado had kept investors waiting for years after setting out a strategy to grow faster by providing its technology to other supermarket chains overseas as well as being an online retailer in its own right. "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".

Rodney McMullen, Kroger's chairman and CEO, described the deal with Ocado as "an innovative, exciting and transformative partnership".

"We are actively creating a seamless digital experience for our customers".

The new relationship is not expected to affect Kroger's earnings per diluted share guidance range for 2018 and 2019 as it is already reflected in the company's "Restock Kroger" plan.


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