Ocado to acquire Kindred Systems and Haddington Dynamics for £222 million

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in his free… read more.
on Nov 2, 2020
  • Ocado to acquire Kindred Systems and Haddington Dynamics for £222 million.
  • The British online supermarket raises its earnings guidance for the full year.
  • The grocery retailer expects £30 million of boost to revenue in fiscal 2021.

Ocado Group plc (LON: OCDO) raised its earnings guidance for the full year on Monday. The company said that trading remained robust at its joint venture with the British multinational retailer, Marks & Spencer.

Ocado Group also expressed plans on Monday of acquiring an advanced piece-picking robotics company, Kindred Systems Inc. for £202.77 million. It will also invest another £19.35 million to buy a robotic-arm designer and manufacturer, Haddington Dynamics Inc.

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The British online supermarket expects the two acquisitions to help expand its footprint in robotics solutions outside of grocery. In a report published in September, Ocado had revealed a 52% annualised growth in revenue as demand for online grocery showed resilience amidst the Coronavirus pandemic that has so far infected more than one million people in the United Kingdom and caused over 46 thousand deaths.

Ocado expects £30 million of boost to revenue in fiscal 2021

According to Ocado, the transactions are unlikely to cast a financial impact in fiscal 2020. In the next financial year, it forecasts roughly £30 million of boost to revenue attributed to the acquisitions. Its full-year EBITDA (earnings before interests, taxes, depreciation, and amortisation) in fiscal 2021, on the other hand, is expected to take a minor hit.

On the back of robust performance in the fiscal fourth quarter as trading remained strong at Ocado Retail Ltd, the Hatfield-based company raised its earnings guidance for the full year. It now forecasts more than £60 million of annual EBITDA as compared to £40 million that it had estimated previously. Ocado said:

“Ocado continues to see high demand as consumers migrate to online grocery in record numbers.”

In separate news from the UK, Associated British Foods estimated £375 million of hit to sales due to the COVID-19 crisis that is pushing stores again into temporarily shutting down.

Ocado’s performance in the stock market

Ocado Group plc jumped close to 8% in premarket trading on Monday and gained another 2% in the next hours. Including the price action, shares of the company are now trading at £25 per share versus a sharply lower £10.64 per share in the last week of February. Ocado had started the year at a per-share price of £12.60. Learn more about how do people make money on the stock market.

At the time of writing, the world’s largest dedicated online grocery retailer has a market cap of £18.70 billion.

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