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Ocado on the rise as deal rumours swirl
Shares in Ocado, the online grocery specialist, marched higher on Thursday as City chatter grew louder about a potential new overseas contract and renewed talk of a possible takeover bid.
Reports in Sweden suggested that, following Ocado's first major deal with French grocer Casino in November, another deal could be imminent with Swedish retailer ICA Gruppen in coming days.
Furthermore, City traders were said to be speculating about a possible takeover bid from retail behemoth Walmart, the Daily Mail reported, as the US looks to fight back against the rise of online competitors, chiefly Amazon.
There have been takeover rumours before, with Amazon itself mooted as a potential suitor almost exactly a year ago.
"While this never materialised, the irony is that Amazon's purchase of Whole Foods has given traditional retailers a bit of a kick up the backside and this could feasibly spark interest in Ocado's technology," said analyst George Salmon at Hargreaves Lansdown. "We'd expect this to come in the form of more licencing deals, however a takeover approach can't be ruled out."
Having fallen below 240p in November, the Casino deal saw Ocado's shares rally 20%, which as one of the most shorted companies on the FTSE 350 wiped out £55m from the value of a cabal of bearish hedge funds.
In all, the Casino contract saw Ocado's shares gain around 60% to 390p by the end of 2017, even though a December update revealed slightly slower sales growth in the fourth quarter as a lack of delivery drivers put the brakes on capacity.
The business generated revenue of £373.8m in the 14 weeks to 3 December, up 11.6% on the same period last year, with chief executive Tim Steiner saying the driver issue had been "largely resolved".
On Thursday the shares were up 17p or 4% on the day to 440p.