Shares in Ocado (LON:OCDO) have surged in London today as the online grocer confirmed that it was in talks with Marks & Spencer Group (LON:MKS). The move comes after reports suggested last month that the companies were in ‘secret’ discussions over the launch of a food delivery service which will see the high street retailer buy key distribution centres, delivery vans and lorries from the online food grocer.
As of 12:27 GMT, Ocado’s share price had added 7.71 percent to 954.50p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 1.06 percent lower at 7,107.68 points. Marks & Spencer’s share price meanwhile is 1.84 percent up at 299.10p.
Ocado and M&S confirm talks
Ocado and Marks & Spencer issued short statements to the London Stock Exchange today, confirming that they were in discussions “regarding a joint venture in UK Retail,” while cautioning that there was “no certainty that these discussions will result in any agreement or as to the timing of any such agreement”.
The confirmation followed a report in the Evening Standard which suggested that the companies were poised to confirm the plans as soon as tomorrow. The newspaper further quoted sources close to the deal as saying that M&S will pay Ocado between £800 million and £900 million for a 50-percent stake in the new venture.
Analysts on online grocer
The 16 analysts offering 12-month price targets for Ocado for the Financial Times have a median target of 903.00p, with a high estimate of 1,440.00p and a low estimate of 720.00p. As of February 23, the consensus forecast amongst 20 polled investment analysts covering the blue-chip group has it that the company will outperform the market.
As of 12:45 GMT, Tuesday, 26 February, Ocado Group PLC share price is 954.50p.