Ocado and Kroger to build online network

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He said Kroger, which had sales of $122 billion in its last fiscal year, was the grocer best-positioned to succeed in the US sector.

Shares in Ocado shot up by more than 50% to a record high in London after the deal was announced Thursday. Interestingly, however, it will also take a 5% stake (new shares); the first time this has appeared in an Ocado partnership agreement.

In a statement issued today (17 May), Ocado said that having signed the partnership agreement with Kroger it will now "discontinue discussions with other US-based retailers". It has struck partnerships with Groupe Casino in France, Sobeys in Canada, and ICA Group in Sweden.

"Ocado's unique, proprietary and industry-leading technology is set to transform the shopping experience of consumers around the world".

Kroger, who posted revenues of $122bn a year ago, will utilise Ocado's technology to automate and process the packing of grocery orders, using smart warehouses and robots in advanced fulfilment centres.

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Tim Steiner, CEO of Ocado, commented: "The opportunity to partner with Kroger to transform the way in which U.S. customers buy grocery represents a huge opportunity to redefine the grocery experience of Kroger's customers and create value for the stakeholders of both Kroger and Ocado". Our success as a retailer shows that we can offer customers unrivalled choice, quality and convenience, efficiently and profitably.

Shares in Ocado are up by more than 250% over the last six months, as the company has finally delivered on expectations of an global expansion.

Ocado said that it predicts the deal will have a neutral impact on its earnings this year.

James Zimmerman, the best performing manager in Citywire's UK Smaller Companies sector over the previous year, holds 2.8% of his £297 million Jupiter UK Smaller Companies fund in Ocado, his third largest position.

"Bagging a giant U.S. retailer is a major coup for Tim Steiner and as previously noted, we should see many more deals". It's another blow, however, for the 7.2% who remain resolutely bearish, some of whom are surely rushing for the exit (buying to cover their short positions), contributing to the share price jump. "The market reaction was exceptionally bullish with shares jumping by 40% in early trade on the announcement".

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