Ocado Shares Soar After Deal With Kroger to Enter the US

Delivery vans are lined up prior to dispatch at the Ocado CFC in Andover Britain

Party in the USA: Ocado shares rocket on US push in tie-up with Kroger

The news also inflicts pain on people who had been betting against Ocado via short selling as the spike in the price will have triggered margin calls, forcing them to deposit more money or close out their position.

The alliance will bring to the US for the first time the unparalleled technology underpinnings of the Ocado Smart Platform, which includes online ordering, automated fulfillment and home delivery capabilities.

As part of the deal, Kroger will take a stake in the British company, equivalent to 5 percent of the existing share capital valued at 183 million pounds ($247.5 million), Ocado said.

The pair are working to identify the first three sites in 2018 for development of automated warehouse facilities.

Britain's online supermarket Ocado clinched a game-changing deal with Kroger as its exclusive partner in the USA, securing its entry into the world's biggest market and sending its shares up 50 percent.

Ocado chief executive Tim Steiner said working with Kroger to transform the way in which USA customers bought groceries represented "a huge opportunity to redefine the grocery experience" for Kroger customers.

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Kroger will pay "compensation" to Ocado "in the event of a failure to commit to the target capacity", the United Kingdom firm said.

Ocado has broken off talks with other USA supermarket chains following the deal with Kroger.

Ocado said that it expects that the structure of the terms that it will agree with Kroger will be "broadly similar per CFC" to those agreed with its existing worldwide partners: Groupe Casino, in France; Sobeys, in Canada; and ICA, in Sweden.

Ocado had kept investors waiting for years after setting out a strategy to grow faster by providing its technology to other supermarket chains overseas as well as being an online retailer in its own right.

'Another leg up in the share price today reflects market excitement about the size of the opportunity across the Atlantic.

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