Ocado Group plc (OCDDY) shares surged Tuesday after the British online supermarket said it had partnered a France's Groupe Casino (CGUSY) to provide it with is proprietary customer and logistics technology.
Ocado was marked 20% higher in the opening 90 minutes of trading in London, changing hands at 307.5 pence after an initial gain of 27% that was the largest single-day move in four-and-a-half years. Casino shares were up 2% in Paris and changing hands at €49.19 each.
The online-only supermarket said it will partner with Casino to develop the Ocado Smart Platform (OSP) in France, marking its first international agreement and a move by the company to become a technology provider.
As part of the deal, Ocado will invest in the construction of an automated warehouse, which is expected to be finished in two years and will serve the Greater Paris area, the Normandie and Hauts de France Regions. Casino will also gain access to Ocado's front-end web site functionality, last-mile routing management and big data, real time implementation.
Groupe Casino will pay Ocado certain upfront fees upon signing, and during the development phase, then ongoing fees linked to its utilization of capacity within the CFC and service criteria.
"This agreement is a major leap in terms of quality: 50,000 food items will be offered in the first stage to customers in the Greater Paris area with precise and speedy delivery at home and through a platform which makes it achievable to do this profitably," Groupe Casino CEO Jean-Charles Naouri said in a statement.
Ocado said it expects the deal to create significant long-term value to the business, but it will have minimal impact to earnings in full year 2017, given the current financial year ends on Dec. 3. Ocado said it expected to incur additional capex of £15 million in the full year 2018 to support this partnership and accelerate the development of the platform, with further capex in future years.
Casino had reportedly been under the gaze of Amazon AMZN, who was said to be looking for either a distribution deal or to make an acquisition in France, Reuters reported in October. Casino shares surged more than 4% on the day the interest was reported.
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