Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.
Ocado Group Plc licensed its online grocery system to Japanese retailer Aeon Co., expanding the U.K. e-commerce company’s technology to a new market in one of its biggest overseas deals.
Ocado’s shares surged as much as 11% early Friday in London, the most since July.
The British company said it will develop a national fulfillment network to serve Japanese consumers, with expected sales capacity of around 1 trillion yen ($9.1 billion) by 2035. The partners will build automated warehouses like those Ocado has set up in the U.K., where robots fill customer orders for home delivery.
The deal expands Ocado’s reach into Asia as it focuses on developing its technology operations after Marks & Spencer Group Plc bought a 50% stake in the company’s grocery business. Ocado also has licensing deals with Kroger Co. in the U.S., Sobeys Inc. in Canada, Coles Group in Australia, Casino Guichard-Perrachon SA in France and others.
Chiba, Japan-based Aeon operates more than 21,000 stores, including supermarkets, convenience stores, clothing chains and general merchandise retailers, across 14 countries. The agreement covers the Japanese market, Ocado said, though it’s also casting its eye across the region.
“Asia is an area of opportunity,” Chief Financial Officer Duncan Tatton-Brown said on a call. “There will come a day when entering China is sensible, but not yet.”
The U.K. company said the deal will lift operating costs by 25 million pounds ($32 million) in the 2020 financial year.
The latest agreement provides some reassurance to investors after a fire leveled one of Ocado’s warehouses in the U.K. in February. The shares have risen almost 70% so far this year.
By: Eric Pfanner and Thomas Mulier (Bloomberg).
Editing: Eric Pfanner.
Image: Yahoo, UK.
Review: FlagMarkets.