Shares in online grocery retailer Ocado rose sharply in early morning trading – up over 10% to 457.20 – following the company’s announcement of an agreement to partner with Sobeys.
The deal will see Sobeys partner with Ocado Solutions to develop an online grocery business in Canada using the Ocado Smart Platform.
Sobeys is Canada's second largest food retailer, operating more than 1,500 stores across the country, and generating sales of $23.8bn in 2017.
Ocado will partner exclusively in Canada with Sobeys to launch their end-to-end solution for online grocery services.
Sobeys and Ocado will develop their first Customer Fulfilment Centre (CFC) in the Greater Toronto Area. The build is expected to take approximately two years.
In addition to this initial CFC, Sobeys and Ocado will consider developing other CFCs in Canada's dense urban areas.
In consideration of the investments made by Ocado, including maintenance and access to technology, Sobeys will pay Ocado certain upfront fees upon signing and during the development phase, then ongoing fees linked to installed capacity within the CFC and service criteria.
Commenting on the partnership Michael Medline, President and CEO of Sobeys said:"This unique and innovative Sobeys and Ocado experience will offer consumers the biggest selection, freshest products and most reliable delivery available anywhere on the planet.
“Our end-to-end ecommerce solution will allow Sobeys to build an online offer in a manner that is profitable and creates exceptional value for our customers, investors and supplier partners."