Kroger allies with United Kingdom online grocer Ocado

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It is the the largest supermarket chain by revenue in the U.S. and the second-largest general retailer (behind Walmart) and the eighteenth largest company in the U.S. As well as having a large sore presence, Kruger recognizes that an increasing number of sales are shifting online.

Ocado has signed an exclusive partnership with America's second-biggest supermarket chain - sending the United Kingdom online grocer's shares to record levels.

Kroger will increase its existing investment in Ocado by 5% in a subscription rights agreement.

The Cincinnati-based grocer said it's already working with Ocado to identify three sites for the development of new, automated warehouses in 2018.

Ocado expects the earnings impact from the Kroger deal to be neutral in fiscal year 2018. "The opportunity to partner with Kroger to transform the way in which USA customers buy groceries represents a huge opportunity to redefine the grocery experience of Kroger's customers".

Ocado is on the cusp of promotion to the FTSE 100 after it reached a potentially game-changing partnership with one of the world's biggest grocers.

The company claimed the value of the Kroger partnership was worth more than the others in France, Canada and Sweden combined.

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"Ocado has really awesome technology that works", said Ken Lonyai, Independent Consultant and Strategist, in a RetailWire discussion.

Edinburgh Worldwide is the top-performing global smaller companies investment trust over the last three years, with the shares up 86%, while the Global Discovery fund has returned 55% over three years to the end of April, placing it third in its Citywire sector.

The deal is a setback for Ahold Delhaize, owner of US chains Food Lion, Stop & Shop and Giant, which some analysts had considered a candidate to merge with Kroger to give the retailer access to Ahold's USA online grocery delivery service Peapod. The deal helped lift both sets of shares, with Ocado benefitting the most. More than 56 million Ocado shares were on loan on Tuesday, the most recent data from industry tracker FIS' Astec Analytics showed.

Shares of Kroger, based in Cincinnati, rose almost 3 percent in premarket trading.

As part of the partnership with Ocado, the group will adopt the Ocado Smart Platform.

Here's how leading retail analysts saw Ocado's latest deal. "We are actively creating a seamless digital experience for our customers".

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