Ahead of this morning’s confirmation of the £1.5bn tie-up between Ocado and M&S, long-awaited confirmation the pair were in talks is heavily covered in today’s papers.
The Evening Standard finally flushed out confirmation from Ocado and M&S that they were locked in talks after news first broke of discussions in January. The Standard said yesterday that M&S was poised to seal an Ocado deal to create £1.8bn joint venture [since revealed as £1.5bn this morning]. “The two firms have been in frantic talks for the past month over the tie-up”, the Standard said.
“Marks and Spencer is on the brink of breaking into food delivery after revealing it is in talks with Ocado”, writes The Financial Times (£). The deal “would provide the 135-year-old retail stalwart with a full online food delivery service years of resistance” (The Telegraph). Shares in both companies surged on Tuesday after they rushed out identical statements that confirmed they were in discussions (The Guardian). Marks & Spencer is poised to bag a crucial deal with Ocado as chairman Archie Norman tries to revive the struggling retailer (The Daily Mail). The two firms need to agree deal signed by 1 March as Ocado must give Waitrose 18 months’ notice to quit their current partnership (Sky News).
The FT’s Lombard column writes a late M&S move into online food would deliver far more to Ocado, warning that the chain’s shareholders may be the ones left with indigestion if a retail joint venture deal is made. “Does M&S really want to pay so much for customers who may be more loyal to the Waitrose brand than the Ocado van?” (The Financial Times £)
“Scorching price for Ocado’s robots” writes Alistair Osborne in The Times (£). “How will M&S pay for its stake? Add it to its £1.8 billion net debt and the group would be close to three times geared. So will it need a rights issue? Robots can be pricey — even pyromaniac ones. “ (The Times £)
Marks & Spencer is considering [since confirmed] launching a rights issue as it closes in on a deal to buy half of Ocado’s domestic online grocery business. (The Times £)
Online grocer Ocado capitalises on two decades of knowhow, writes The Times (£). Since leaving Goldman Sachs in 2000 to start Ocado, Tim Steiner has battled to convince sceptics that the online grocer could ever be more than a niche purveyor of avocados and crab tails to affluent households.
What now for Waitrose, asks Ashley Armstrong in The Telegraph (£). “Waitrose will have to face up to the brutal reality of an intense grocery price war, the huge uncertainty swirling around rivals Asda and Sainsbury’s, and the relentless rise of the discounters all on its own.”
Waitrose will clearly lose via the re-arrangement and we may eventually learn why it didn’t negotiate harder, but it doesn’t necessarily imply a win-win for the new duo. (The Guardian)
British chocolatier Hotel Chocolat is looking to expand into prime retail sites vacated by closing stores as it defied gloom in the sector to report double-digit growth (The Financial Times £). Chocolatier Hotel Chocolat has unveiled a surge in half-year sales as it shrugs off the high street gloom with new openings and a promising international push (The Telegraph £). New store openings and bumper sales of a new hot chocolate maker helped sweeten Hotel Chocolat’s performance in the last six months of 2018 (The Daily Mail).
Delaying Britain’s departure from the EU would be better for the economy in the longer term – but the move could also have a damaging impact on firms that have spent two years preparing for a 29 March exit and now face the prospect of planning for a double cliff-edge, in March and June, business leaders have warned. (The Guardian)
The government has issued a bleak warning over a no-deal Brexit, estimating the UK economy could be 9% weaker in the long run, businesses in Northern Ireland might go bust and food prices will increase (The Guardian). The report said “some food prices are likely to increase” and customs checks could cost business £13bn a year in a no-deal scenario. It also said there was “little evidence that businesses are preparing in earnest” (The BBC).
The pound has surged to a 22-month high versus the euro as expectations grow that a hard Brexit is looking less likely. (Sky News)
Prices for clothes, consumer goods and other non-food items are up for the first time in six years as retailers pass on higher costs caused by a fall in the pound since the Brexit vote and higher oil prices (The Times £).
Retail workers in Britain are more likely to face unemployment rather than finding another job amid mounting numbers of job losses on the high street, with younger staff hardest hit, according to a report. (The Guardian)