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Summary
- Ocado Group is set to buy two US robotics firms - Kindred Systems Inc and Haddington Dynamics Inc - for a total of $287 million
- Ocado expects the deals would speed up its commercialisation of robotic picking and other automation tasks for its Ocado Smart Platforms
- Ocado has only a 1.8 per cent share of the UK’s grocery market
British online supermarket and technology group Ocado has acquired two US-based robotics companies for a total of $287 million (222 million pounds) in a bid to speed up its online smart platforms.
The supermarket group is set to buy two Kindred Systems Inc and Haddington Dynamics Inc for $262 million and $25 million, respectively, and is awaiting necessary approvals by US regulators to seal the deal.
The group also upgraded its full-year earnings outlook after registering robust sales recently through its new retail joint venture with Marks & Spencer.
The group, in an update to its shareholders, said it now expects to post earnings before interest, tax, depreciation and amortisation (EBITDA) of £60 million, up from its previous £40 million guidance.
Ocado said it sees a rise in demand as consumers prefer online grocery in high numbers. In September, the group had launched the £1.5 billion JV with Marks & Spencer after breaking the long-term ties with the grocery partner Waitrose.
Tim Steiner, the chief executive officer at Ocado, said the company is witnessing a robust demand at present; however, the customers are not stockpiling toilet rolls or any other stuff.
The group, as he said, is continuing to trade at the highest volumes every day, which is a robust sales model. He added that the firm wants to speed up the expansion of its platform, including enhancing its speed, accuracy, product variety and finances.
While talking about the new market, Steiner added that the deal offers a platform for robotic solutions beyond the grocery.
Ocado has only a 1.8 per cent share of the UK’s grocery market, its technical knowhow for mechanically controlled warehouses has generated collaborations with supermarket franchises across the globe, boosting a stock market estimation of more than £17 billion.
Ocado’s shares jumped 10.62 per cent and were trading at GBX 2,517.70 per share (11:55 am GMT) after the deal was announced.
UK online grocery
Though the coronavirus pandemic has slowed down the UK economy and businesses have been hit hard, the country’s online grocery market has seen new heights as people prefer online shopping over physical stores.
According to data, insights and consulting firm Kantar, Britain’s online grocery sales till October 4 were up 76% on a year ago, with one in five households ordering groceries via the internet, taking the aggregate surge in orders to £3.2 billion since the beginning of lockdown.
Going further, the online grocery sale is expected to increase further as the country is getting ready for the second national lockdown from Thursday, 5 November 2020.
