Coles share price: Coles deal with Ocado sees shares rise 3%
Shares of Australian supermarket chain Coles, have risen to 3.1% on Tuesday, after announcing a deal with British online retailer Ocado
Coles signed the partnership with Ocado on Tuesday, which will see Ocado available to Coles’ Australian customers by 2023.
The agreement will allow Coles access to Ocado’s services for product distribution.
Coles' capital expenditure on this deal will likely be about A$130 million to A$150 million
The deal comes as online competition in the food-retail industry ramps up, putting added pressure on retailers.
Coles share price up 3.1 % upon the news
In response to the announcement, Coles' share price has risen to A$12.065, marking their biggest intraday percentage gain since January 14. Coles stocks also soared, hitting their highest since February 19.
Coles to use distribution centres through Ocado
Coles plan is to provide services to online customers by fulfilling orders through Ocado’s robotic distribution centres, with customers in less populated areas benefiting from Ocado’s store-pick software.
Two robotic distribution centres will be built in Sydney and Melbourne over four years to process the orders.
Coles will pay Ocado upfront fees upon signing and during the development phase. Ocado said it expected the deal to create significant long-term value to the business.
Ocado has 1% share of Britain's grocery market but has an 8.7 billion-pound ($11.5 billion) stock market value, largely driven by the technology side of its business.
It provides international retailers with the infrastructure and software to develop their own online grocery businesses to compete with online distributors.
Analysts say the agreement could be a good move for Coles, helping them to tackle online competition.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
You might be interested in…
Find out what charges your trades could incur with our transparent fee structure.
Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.
Stay on top of upcoming market-moving events with our customisable economic calendar.