Marks & Spencer and Ocado have agreed on a joint food delivery venture.
Under the deal, Marks & Spencer is set to pay £750 million to acquire a 50% share of Ocado’s retail business.
The venture is set to be in operation by the September 2020 at the latest, after Ocado terminates its current agreement with Waitrose.
Steve Rowe, Marks & Spencer’s chief executive, said he had “always believed that M&S Food could and should be online” and combining M&S’s food with Ocado’s technology and delivery network was a “win-win” and “compelling proposition to drive long-term growth”.
He added: “Our investment in a fully aligned joint venture with Ocado accelerates our food strategy as it enables us to take our food online in an immediately profitable, scalable and sustainable way.”
Tim Steiner, the chief executive of Ocado, described the deal as a “transformative moment in the UK retail sector” that would combine “two iconic and much-loved retail brands set to provide an unrivalled online grocery offer”.
Almost two years ago Marks & Spencer announced its intention to enter the food delivery service market, in a bid to attract online consumers.
In recent years, the retailer has been struggling amid weaker Christmas sales and slower sales for its clothing ranges.
As a result, M&S announced plans to limit the amount of store space dedicated to clothing, in a bid to streamline costs.
Shares in Marks & Spencer (LON:MKS) are currently -9.70% as of 10:35AM (GMT).
Meanwhile, Ocado shares (LON:OCDO) are +3.64%.