Marks and Spencer in talks with Ocado over new food delivery service

Ocado partnering with M&S would likely spell the end of its deal with Waitrose

Ocado partnering with M&S would likely spell the end of its deal with Waitrose

Marks & Spencer is in talks with Ocado to form a joint venture that would give M&S a full online food delivery service for the first time, sending shares in both companies surging today.

The Evening Standard reported on Tuesday morning that Ocado and M&S are set to announce plans for a joint venture as soon as Wednesday.

Chief executive, Tim Steiner, said earlier this month that the arrangement with Waitrose prevented it from supplying own label products from another leading United Kingdom grocery retailer.

"There is no certainty that these discussions will result in any agreement or as to the timing of any such agreement", they added.

Shares in Ocado jumped 89p, or 10 per cent, to 981p, while M&S added 10p, or 3.5 per cent, to 304p. But both companies have since released short statements to play down a possible merger, saying there is no guarantee a deal will be completed.

The 135-year-old M&S is a mainstay of Britain's shopping streets, but has been struggling to cope in recent years with the rise of fast fashion, discounters and online shopping.

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Ocado's deal with Waitrose, which prevents it from delivering any other store's own branded goods, ends in September 2020.

Marks & Spencer has confirmed that is in talks with Ocado over the launch of a food delivery service that signals the writing is on the wall for its long-running tie-up with Waitrose.

M&S has been on the United Kingdom high street for more than a century, but in recent years has struggled to cope with the rise of fast fashion, discounters and online shopping.

The firm now sells wine, flowers and clothes online, but does not offer a full delivery service for its upmarket foods.

'Although a partnership between M&S Food and United Kingdom grocery's tech wunderkind Ocado may seem like a step in the right direction, this attempt to rapidly gain momentum in the online market may be a misstep, ' he warned.

Reports said that Ocado founder Tim Steiner has offered to sell his key distribution centre at Hatfield and Ocado's fleet of refrigerated vans and lorries to M&S for around £850million, as the FTSE darling makes a break away from online grocery fulfilment to focus on its tech division.

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