Morrisons is one of the ‘big four’ supermarket chains, but its lack of online service and local convenience stores has put it at a disadvantage to its rivals.
The terms of the 25-year agreement will offer Morrisons much more visibility in the marketplace and provides Ocado with the security it needs by generating a welcome chunk of funds for the firm to pay down debt.
Morrisons, which is strong in the north of England, also offers Ocado a counterbalance to its deal with Waitrose, which is much stronger in the south.
That said, Waitrose has made some ominous noises about a potential tie-up with Morrisons and its reaction to it. At best, it’s likely to annoy Waitrose. At worst, it could result in legal action to try to prevent the Ocado-Morrisons tie-up happening before Ocado’s contract with Waitrose comes to an end in 2017.
Sam Fuller is UK head of consumer and leisure at international investment bank Altium. This is a personal blog and views expressed are his own.
© FoodBev Media Ltd 2024