Market report: Ocado delivers as hopes of M&S tie-up rise

Shares in Ocado surged after reports it is to enter talks with M&S over a partnership

Ocado

Jamie Nimmo2 May 2017

Traders tucked into shares of Ocado in the hope it can strike a deal to deliver food for Marks & Spencer.

Reports over the weekend suggested the online grocery deliveries firm, which already has a distribution deal with supermarkets group Morrisons, was to begin talks with the High Street giant in the coming weeks.

The FTSE 250 company was the standout performer on the mid-cap index as the shares surged 19.66p, or 8%, to 270.66p.

A tie-up would come as a boost for Ocado, which has failed to strike a deal overseas. It also confirmed a five-year tie-up with Dobbies Garden Centres today to launch an online store.

Bruno Monteyne, an analyst at Bernstein, said a deal with M&S could be worth £2 million to £4 million a year “in the medium term” to Ocado, which has made around £12 million over the past three years through its Morrisons tie-up.

“This could be significantly lower if there was a competitive bid process with other players vying to provide an in-store pick solution for M&S,” Monteyne added. Shares in M&S were off 0.9p at 365.7p.

Traders may have been feeling a little bleary-eyed after the Bank Holiday weekend but there was no sign of a hangover for the FTSE 100.

The UK’s main share index rose 30.89 points to 7234.83, putting an end to the losing streak which dominated trading at the end of last week.

BP’s solid results drove the Footsie higher and also lifted fellow supermajor Royal Dutch Shell by 12p to 2064.5p.

Asia-focused bank Standard Chartered was among the blue-chip losers, off 4.9p at 716.3p after HSBC downgraded from Hold to Reduce.

Joe Sparacio’s appointment as chief financial officer of film and TV rights group Entertainment One was not met with resounding approval in the City. The shares fell 5.8p to 241.5p.

PureCircle left a bitter taste as it revealed it has struggled to recover from a US investigation into whether its natural sweeteners were the product of slave labour.