Kroger inks deal to acquire home-delivery, AI technology

Kroger paying $247M to license Ocado online home-delivery technology

Kroger paying $247M to license Ocado online home-delivery technology

Kroger, which is increasing its stake in Ocado to a total of more than 6%, hailed the Ocado deal as "innovative, exciting and transformative". The companies said they aim to identify up to 20 possible sites for the e-commerce facilities over the first three years of their pact. The online grocery delivery aspect of the business is what is coming to the U.S.

Kroger is no stranger to utilizing United Kingdom technology to drive their business because it had a long term partnership with Tesco and Dunnhumby around loyalty programs.

As the terms of the agreement are under discussion, Kroger and Ocado are already planning where in the U.S. the first three sites for new automated warehouse facilities will be.

'We can only applaud Ocado's success in engaging with the most attractive counterpart in the biggest potential market for online food'. The Ocado Smart Platform offers capabilities in online ordering, automated fulfillment and home delivery.

The deal is a setback for Ahold Delhaize, owner of US chains Food Lion, Stop & Shop and Giant, which some analysts had considered a candidate to merge with Kroger to give the retailer access to Ahold's USA online grocery delivery service Peapod.

Kroger will purchase five per cent of the existing issued share capital of Ocado for £183 million as part of the partnership.

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The shares jumped 62% to 894.6p on news of the tie-up with the largest supermarket chain in the US, Ocado's fourth worldwide deal with a supermarket in the last six months. Kroger will be required to pay compensation to Ocado should it fail to commit to the agreed target capacity.

"We look forward to innovating together with Ocado to provide our customers the best possible online and in store experience", said Alex Tosolini, Kroger's Senior Vice President of Business Development.

Walmart Inc.'s mixed first quarter results had traders batting around stock between plus and minus and pre-market but, after opening higher, less impressed investors are winning out and sending shares down as much as 2.6 percent. It has struck partnerships with Groupe Casino in France, Sobeys in Canada, and ICA Group in Sweden.

Ocado was also upbeat on the deal and its own abilities.

"We think this is just about as positive a deal as could have been expected to have been announced by Ocado", analysts at Barclays said.

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