Ocado soars as investors bet on Amazon tie-up
MORE than £190m was added to the value of ocado amid speculation it could be Amazon’s next target after the tech giant’s £10.7bn takeover of Whole Foods.
The online food store’s shares leapt 11pc, or 30.6p, to 306.4p after analysts at Exane upgraded it to outperform and speculated whether it was next in line for a deal. Amazon shares also hit a high of $1,017 on monday.
Brokers Exane suggested ocado could be potentially attractive for a business looking to push on in online food.
Exane said while ‘ocado is unlikely to be an acquisition target’ they admitted the probability had now increased.
Amazon sent shockwaves through the market on Friday when it revealed it was snapping up Whole Foods, the upmarket retailer that specialises in organic food. Amazon’s foray into the grocery market sparked a sharp sell- off at rivals, wiping £1.5bn from the value of Tesco, Sainsbury’s and marks & Spencer as traders feared the internet giant was about to plough billions of pounds into the industry.
The announcement also sent shares in Australian retailers plummeting yesterday.
Amazon announced it would bring its service to the country earlier this year – sparking a sharp markdown in prices at electronic retailers.
But Australia’s two main supermarket groups, Woolworths and Coles, were originally thought to be unaffected. But the Whole Foods deal, however, has prompted a wave of concerns among investors.
Earlier this month, ocado bosses revealed that the supermarket had signed an agreement with a mystery regional European retailer to share online software – but drew a mixed reaction from investors amid concerns it wasn’t quite the deal first hoped for.
Under the terms of the deal, the retailer – whose identity remains a mystery – will use ocado’s software but not its robotic warehouse technology.
Little is also known about the European partner, beyond the fact that it is a regional retailer rather than a national seller hoped for – another blow to ocado investors who felt the deal failed to go far enough.
A possible tie-up with Amazon would, therefore, be welcome and comes amid rumours American giant Walmart – Asda’s owner – has visited ocado’s facility in Andover.