Ocado Group PLC (OTCMKTS:OCDGF) stock was blasting off Thursday on news of a new deal with Kroger Co (NYSE:KR).
The good news for OCDGF stock is that the company is now the exclusive grocery delivery service for Kroger in the U.S. As part of this agreement, KR is increasing its investment in the company by 5%. This is being done though a subscription rights agreement and brings its total investment in OCDGF to 6%.
Kroger says that it is already looking for three locations to build automated delivery warehouses in 2018. The company also notes that it is planning to open a total of 20 of these locations in the first three years after the deal.
Kroger notes that it isn’t expecting the deal with Ocado to affect its earnings for the full year of 2018. It also says that it has already taken into account for the effect it will have for 2019 earnings with its Restock Kroger plan.
The deal with Kroger will be the first time that Ocado has brought its business to the U.S. The company is based out of UK, where it operates its own retail stores and online grocery delivery. The online grocery delivery aspect of the business is what is coming to the U.S.
“We are actively creating a seamless digital experience for our customers,” Rodney McMullen, Chairman and CEO of Kroger, said in a statement. “Our partnership with Ocado will speed up our efforts to redefine the food and grocery customer experience – creating value for customers and shareholders alike.”
OCDGF stock was up 39% and KR stock was up 2% as of Thursday morning.
As of this writing, William White did not hold a position in any of the aforementioned securities.
