Ocado shares rise 32% amid rumors Amazon is about to make a bid for the struggling online grocer
Shares in Ocado rose 32 percent yesterday amid rumors Amazon was about to make a bid.
The technology and food group saw its share price hit its highest level since late February on its second day of gains.
Ocado has struggled in the aftermath of the pandemic as the lockdown ended and consumers returned to supermarkets.
But analysts think more than one bidder could be involved, with Marks & Spencer also being touted as a possible candidate for the group.
M&S’s joint venture with Ocado, which it signed in 2019, means it owns 50 percent of Ocado Retail.
Ocado’s share price reached its highest level since late February on its second day of gains amid rumors Amazon is considering a takeover bid
Ocado saw its market value reach over £4.5bn last night, with shares closing at 567.8p.
Orwa Mohamad, an analyst at Third Bridge, said Amazon and Ocado are “somewhat natural fits from an execution standpoint” as the tech giant has historically struggled in the US to integrate its supply chain with Whole Foods, which it owns.
He added, “With Ocado, they don’t have to do everything from scratch because it’s a modern and compliant supply chain and fulfillment process.
“Such a move will get Amazon Fresh into more households, and that’s very important.
“But real organic growth may require some kind of physical acquisition.”
Ocado narrowly avoided demotion from the FTSE 100 index this month after a share price slump.
Danni Hewson, head of financial analysis at AJ Bell, said: ‘Stocks are about as flat as an open bottle of lemonade since the pandemic, but third parties, reportedly including Amazon, can still see value in the brand, technology and infrastructure . ‘
The online grocery delivery company boomed during the lockdown, with its share price reaching a record 2,895 pence in September 2020.
But the easing of restrictions left the company in trouble as consumers flocked to supermarkets.
Ocado’s losses ran to more than £500 million last year, on top of a loss of £177 million a year earlier.
Turnover at its supermarket arm, Ocado Retail, fell 3.8 percent to £2.2 billion last year as cost-conscious customers kept their spending in check.