M&S will pay Ocado £750m (€875m) for a 50% stake in its online retail business
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The face of UK grocery retail continues to evolve rapidly, with Marks & Spencer (M&S) this week announcing a £1.5bn (€1.75bn) joint venture deal with Ocado, the UK-based online supermarket.
Under the terms of the deal, M&S will pay Ocado £750m (€875m) for a 50% stake in its online retail business, which will continue to trade as Ocado.com.
The new venture will come into operation by September 2020 at the latest, when Ocado’s current deal with Waitrose comes to an end.
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Minimal presence
M&S currently has a minimal presence in online grocery retail and says this new deal will give it access to Ocado’s online sales platform.
Online grocery sales in the UK are set to rise from £11bn (€13bn) last year to reach £17bn (€20bn) by 2023, accounting for 7% of total grocery sales in the UK.
M&S will finance the deal by issuing £600m (€700m) worth of new shares as well as slashing its dividend payout to shareholders by 40%. Shares in M&S slumped almost 10% after the deal was announced, suggesting it had overpaid for its share of the joint venture.
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The face of UK grocery retail continues to evolve rapidly, with Marks & Spencer (M&S) this week announcing a £1.5bn (€1.75bn) joint venture deal with Ocado, the UK-based online supermarket.
Under the terms of the deal, M&S will pay Ocado £750m (€875m) for a 50% stake in its online retail business, which will continue to trade as Ocado.com.
The new venture will come into operation by September 2020 at the latest, when Ocado’s current deal with Waitrose comes to an end.
Minimal presence
M&S currently has a minimal presence in online grocery retail and says this new deal will give it access to Ocado’s online sales platform.
Online grocery sales in the UK are set to rise from £11bn (€13bn) last year to reach £17bn (€20bn) by 2023, accounting for 7% of total grocery sales in the UK.
M&S will finance the deal by issuing £600m (€700m) worth of new shares as well as slashing its dividend payout to shareholders by 40%. Shares in M&S slumped almost 10% after the deal was announced, suggesting it had overpaid for its share of the joint venture.
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