Ocado shares dive 8% on Waitrose expansion opposition

Expansion plans for the food delivery firm have suffered a blow after Waitrose said it would oppose a tie-up between Ocado and Morrisons.

by Michael Northcott
Last Updated: 19 Aug 2013

Lawyers for Waitrose are currently trying to work out whether Ocado’s plans to share some distribution resources and warehouse space with Morrisons would constitute a breach of contract.

Waitrose MD Mark Price said: ‘I would never knowingly sign a contract with Ocado that agreed to them working with another retail competitor.’

With Waitrose putting the brakes on such a deal, it now looks like Ocado would only be able to license its intellectual property out to Morrisons for the supermarket to then do its own infrastructure legwork. That will mean much less dollar for Ocado.

Part of Price’s concern, he revealed to the Telegraph, is that the whole John Lewis Partnership is planning to invest heavily in its online retail efforts. He said: ‘We have moved to defcon one because we don’t know where this is going to end up and we are now working on adding considerable extra capacity to Waitrose.com.’

Obviously, allow Ocado to do a deal which would speed up Morrisons expansion into online retail is counter-intuitive, but Ocado chief exec Tim Steiner insists there is no conflict of interest there. He said: ‘The Ocado.com business will remain totally unchanged, sourcing its products from the Waitrose-Ocado brand products.’

Whether or not the deal goes off remains to be seen, but we can’t see Waitrose staying quiet if Morrisons suddenly gets an Ocado e-tail boost…

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