Ocado’s new deal could push it in to FTSE 100

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Ocado’s new deal could push it in to FTSE 100
Jaroslaw Kilian / Shutterstock.com

Shares in grocery delivery outfit Ocado (LON:OCDO) soared 278.8p to 827p (as at 14:50 BST) after the company announced that it had inked a deal with US retail giant Kroger. Under the arrangement, Kroger will use Ocado’s technology for food distribution to improve and centralise their online shopping experience. The financial effects of the deal are expected to kick in from 2019.

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Kroger will pay monthly exclusivity and consultancy fees and will also subscribe to new ordinary shares equal to 5% in the British company. If Ocado’s current share price holds, then the new valuation of £6 billion is likely to push it in to the FTSE 100. Analysts from Hargreaves Lansdown said that while the company was primarily known as an online supermarket, this new deal showed it’s potential as a technology and logistics firm.

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