Special delivery as John Lewis unloads its remaining stake in Ocado

The retailer's pension trust has sold off its final stake in the delivery company. Could this be the end of a beautiful friendship?

by Emma Haslett
Last Updated: 06 Nov 2012
Following its troubled IPO last summer, the situation for Ocado seems to have been gently improving. But that’s come to an abrupt halt after John Lewis’s pension trust revealed it has sold its remaining 10.4% stake in the company. The announcement has sent shares into a nosedive, falling from 285p last night to 236p this morning. No doubt it’ll come as a setback to the online grocer – but John Lewis insists that the two sides are still the best of friends…

Goldman Sachs was the bank charged with selling John Lewis’ stake in Ocado, selling off all 57.3m shares for 265p each, raising about £151.8m. John Lewis insists it’s nothing personal: it’s all part of the pension trust’s ‘normal investment management activities’, and that it’s going to have ‘no effect’ on commercial relations with the company – which means Ocado will keep delivering Waitrose groceries as usual. Although even if it wanted to, there’s not much Waitrose could do to stop that – the two companies signed a 10-year deal in May.

Until now, Ocado has actually had rather a good year. After the final quarter of 2010 saw it make its first-ever quarterly profit, shares in the company rallied, jumping by 35% last month. There were even rumours of a takeover: one of the most likely candidates for that being Morrisons – the supermarket has been saying for a while that it wants to improve its online offering. And what better way to do that than buy in a company that has all the infrastructure ready and waiting?

Still, this represents a dramatic turnaround in John Lewis’ attitude to the company: until recently, Waitrose had been Ocado’s long-term supporter. During Ocado’s IPO in the summer, investors remained unenthusiastic, with shares plunging from their opening price of 180p to as low as 123p. At the time, John Lewis sold off more than half its stake in the company, but agreed to a lock-in deal which prevented further sales.

That agreement ended last month, though, and some analysts say today’s sale is an indication of John Lewis’ view of Ocado’s future. It certainly looks like that: after all, John Lewis has been suspiciously quick to seize the opportunity to offload its stake. Doesn’t exactly give the impression that it’s desperate to hold on to those shares, does it?

When Ocado announced its profit at the beginning of this month, CEO Tim Steiner described 2011 as a ‘landmark’ year for Ocado. That may very well still be the case – but not necessarily in the ways he expected.

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