Ocado shares soar 32% amid rumours that Amazon is about to make an offer

Shares in Ocado soared by 32 per cent yesterday amid rumours that Amazon was about to make an offer.

The technology and grocery group saw its share price hit its highest level since late February, in its second day of gains.

Ocado has struggled in the wake of the pandemic as lockdown ended and consumers went back to supermarkets.

But analysts believe there could be more than one bidder involved, with Marks & Spencer also touted as a possible suitor for the Group.

M&S’s joint venture with Ocado, which it signed in 2019, means it owns 50 per cent of Ocado Retail.

Ocado saw its market value reach more than £4.5billion last night, with the shares closing at 567.8p.

Orwa Mohamad, analyst at Third Bridge, said that Amazon and Ocado would be ‘somewhat of a natural fit from a fulfilment point of view’ because the tech giant has struggled in the past in the US with integrating its supply chain with Whole Foods, which it owns.

He added: ‘With Ocado, they don’t have to do everything from scratch as it’s a modern and compatible supply chain and fulfilment process.

‘Such a move will get Amazon Fresh into more households, and that’s a very important thing.

‘However, a physical takeover of some sort may still be required to achieve real organic growth.’

Ocado narrowly dodged demotion from the FTSE 100 index this month following a slump in its share price.

AJ Bell’s head of financial analysis, Danni Hewson, said: ‘The shares have been about as flat as an open bottle of lemonade since the pandemic, but third parties, including reportedly Amazon, may still see value in the brand, technology and infrastructure.’

The online grocery delivery firm boomed in lockdown, with its share price hitting a record 2,895p in September 2020.

But the easing of restrictions put the company on the back foot as consumers flocked back to supermarkets.

Ocado’s losses ballooned to over £500million last year, coming on top of a £177million loss a year earlier. 

Sales at its grocery arm Ocado Retail fell 3.8 per cent to £2.2billion last year as cost-conscious customers reined in spending.