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Ocado (OCDO) has completed its arrangements for a joint-venture (JV) with Marks & Spencer (MKS).
The JV will comprise Ocado’s UK grocery retail business supported by a new partnership for solutions services underpinned by the Ocado Smart Platform (OSP) and the provision of branding and sourcing from M&S.
The completion sees the sale of 50% of Ocado Retail to a wholly-owned subsidiary of M&S.
Ocado has appointed Melanie Smith, currently strategy director at M&S, chief executive of Ocado Retail, and Lawrence Hene, currently the interim managing director of Ocado Retail, as deputy chief executive for a transitional period before he moves back into a senior role within the Ocado group.
The other directors of Ocado Retail are Tim Steiner and Duncan Tatton-Brown, who are chief executive and chief financial officer of Ocado respectively, M&S chief executive Steve Rowe and M&S food MD Stuart Machin. Steiner will also be chair of the board of Ocado Retail.
Ocado Retail will not sell M&S products until 1 September 2020, unless its current arrangements with Waitrose terminate sooner.
“Ocado Retail’s future, as part of a joint venture with M&S, is full of opportunity. The new company will be able to offer customers even greater range, service, quality and value” said Steiner. “Our collaboration will also allow us to grow the business faster, add more jobs, and create more value for all our stakeholders. We are very excited to be working together.”
Rowe added: ”I have always believed that M&S food could and should be online. The addition of Ocado to our family of businesses marks M&S’s first truly transformational step in shaping our future as a digital first retailer, as we combine the magic of M&S food with Ocado’s award-winning service to create a new and compelling proposition.
“Through its unique OSP technology, Ocado has developed the most cost advantaged model in online grocery retail and our new partnership unlocks growth for M&S Food through an immediately profitable, scalable presence in the UK’s fastest growing grocery sales channel.”
“I am absolutely delighted that our JV will be led by Melanie. She is a real talent; who combines extensive retail knowledge, strategic vision and a focus on delivery.”
Morning update
Takaway.com (AMS: TKWY) and Just Eat (JE) have agreed terms on their merger.
The combined group will be known as Just Eat Takeaway.com N.V. Just Eat Shareholders will own about 52% of the combined entity and Takeaway.com shareholders about 48%.
The terms imply a value for Just Eat of 731p per Just Eat share based on Takeaway.com’s closing share price on 26 July of €83.6.
This morning’s statement said this value represented a premium of 15% to Just Eat’s closing share price on 26 July.
The giant will be one of the world’s largest online food delivery platforms with 355m orders worth €7.3bn in 2018, according to the statement.
It would have strong leadership positions in many of the world’s largest food delivery markets, including the United Kingdom, Germany, the Netherlands and Canada.
The directors believe the deal creates recurring annual pre-tax cost benefits of about €20m by the fourth anniversary of the deal with about €10m expected by the first anniversary of completion.
It is expected the combined group will have a two-tier board structure, drawing on “the talent and experience” in both companies to drive the business forward.
Jitse Groen, chief executive of Takway.com, will be chief executive, Paul Harrison, chief financial officer of Just Eat, will be chief finance officer, Brent Wissink, chief finance officer of Takway.com, will become co-chief operating officer, Jorg Gerbig, chief operating officer, will become co-chief operating officer.
Supervisory board appointments include, Mike Evans, who is chairman of Just Eat who becomes chairman, Adriaan Nuhn, chairman of the Takeway.com supervisory board, will assume the role of vice-chairman of the supervisory board and senior independent and non-executive director of the combine group.
The headquarters will be in Amsterdam but a significant part of its operations in the UK, including London, Borehamwood and Bristol will be maintained.
Initial discussions with the FTSE suggests the combined group will be eligible for inclusion in the FTSE 100 and FTSE All-Share Index.
“The combination of Just Eat and Takeaway.com creates one of the world’s largest and most powerful food delivery websites,” said Groen.
“It will become a formidable company that will make an impact on tens of millions of consumers across the globe; it will be at the forefront of product and tech development in the sector, and it will lead the way in its relationship with its consumers, restaurant partners, its staff, and its delivery drivers.”
Just Eat chairman Mike Evans said the board believed it was a “compelling” offer for Just Eat shareholders which would create a global leader in a dynamic and rapidly growing sector.
“Our businesses have a shared philosophy and culture, and together we will create one of the world’s largest online food delivery platforms with leading positions in key markets,” he explained.
“With a significant commitment to the UK and to the employees of Just Eat, we believe the new combination and proven leadership team will allow us to better serve our millions of consumers and thousands of restaurant partners around the world.”
Just Eat would be “a driving force” in the creation of an exciting global leader.
Arabian Food Industries Company Domty (DOMT) has signed an agreement to buy and install a new bakery line with AMF, a US company considered to be one of the world leading manufacturers of high speed bakery equipment.
The production capacity of the new line is 270 thousand pieces per day.
The total cost of the new line with all of its components is EGP 50m. The new line is expected to start operating next February.
It will be the third production linefor the Domty Sandwichand also it could be used to produce plain bread.
Heineken (AMS: HEIA), has included the impact of BEIA financial metrics for 2018 due to the restatement for IAS 37.
It follows the publication of its half-year results on 20 July, including a restatement of its half-year 2018 BEIA financial metrics as well as of the balance sheet as of 31 December due to the restatement for IAS 37.
It said the changes did not impact cash or free operating cash flow. Net revenue (BEIA) came in at €22.5bn and operating profit (BEIA) €3.9bn.
On the markets this morning, the FTSE 100 fell 1.1% in early trading to 7,234.8pts.
FTSE 100 climbers so far this morning include McColl’s Retail Group (MCLS), up 1.4% to 69.5p, Majestic WINE (WINE), up 1.3% to 273.5p, following last week’s deal with Fortress, Finsbury Food Group (FIF) rose 0.7% to 68.5p and TATE & Lyle, climbed 0.3% to 745.5p.
Stocks on the way down in this morning’s falling market, include McBride, (MCB), off 4.4% at 65p, Marks and Spencer Group (MKS), down 3.9% at 193.2p, Premier Foods (PFD), off 3.6% at 33.8p and DS Smith (SMDS), down 2.8% at 328.6p.
This Week in the City
There is a distinct lack of scheduled UK announcements in the sector this week as the summer holidays take hold but there is plenty of news coming out of the US.
Domino’s Pizza Group (DOM) posts its interims tomorrow and the BRC-KPMG Retail Sales survey for July is published. Kerry Group (KYGA) posts its interim management report on Thursday. Ahold Delhaize (AMS:AD) reports Q2 figures on Wednesday and Coca-Cola HBC (CCH) posts interims on Thursday along with Coca-Cola European Partners. (NYSE: CCEP).
Majestic Wine (WINE) holds its AGM on Thursday. It follows last Friday’s announcement of its sale to US investment firm Fortress of its Majestic-branded retail division and its commercial business for £95m.
Over in the US Tyson Foods (NYSE: TSN) holds its fiscal third quarter 2019 earnings later today, Dean Foods (NYSE: DF) posts Q2 results on Tuesday, as does foodservice distributor US Foods (NYSE: USFD)
Blue Apron Holdings (NYSE: APRN) reports interims on Tuesday as does Beirsdorf (ETR: BEI). Costco Wholesale (NASDAQ: COST) reports its July sales figures on Wednesday,Keurig Dr Pepper(NYSE: KDP) reports Q2 figures on Thursday, along with Nomad Foods (NYSE: NOMD), and Kraft Heinz Company (NASDAQ: (KHC) reports its first-half figures.
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