British online grocery firm Ocado has abandoned its pursuit of a 190.7 million pound payout from partner Marks & Spencer regarding their home delivery joint venture, Ocado Retail.
The decision ends a long-running dispute between the two companies after M&S withheld the final installment over disappointing performance metrics.
The two corporations originally formed a 50-50 partnership in Ocado Retail, with M&S paying 560 million pounds upfront for Ocado's logistics and delivery framework.
The additional 190.7 million pound conditional payment was tied to undisclosed performance targets that M&S maintained were not achieved.
Ocado had previously threatened formal legal action against M&S to secure the funds, insisting it possessed a strong legal standing to negotiate a settlement.
“We are very confident we are owed a substantial sum of money,” said Chief Executive Tim Steiner to shareholders in 2024.
However, Ocado has shifted its strategy toward expanding the operational reach of the joint venture rather than pursuing litigation over the withheld funds.
“Ocado Retail continues to be the UK’s fastest-growing grocer, and we were pleased to announce in last week’s half-year results that the business is now profitable across all key measures,” said a spokesperson for Ocado.
The company emphasized its commitment to scaling customer order capacity alongside its commercial partners.
“We expect to build further on this momentum in the coming months by expanding order capacity for customers while maintaining strong growth.
Together with our joint venture partners at M&S, we remain focused on realizing the significant potential of the Ocado Retail business,” said a spokesperson for Ocado.
Marks & Spencer has maintained a cautious approach regarding any expansion of the joint venture, focusing instead on contract negotiations and operational enhancements.
“We have a good relationship with Ocado.
As you would expect, we are in regular discussion, working together to realize the full potential of our partnership.
These discussions are positive,” said a spokesperson for M&S.
Ocado Retail recently reported a pre-tax profit of 12 million pounds for the six months ending in April, bolstered by rising customer totals and higher average order values.
Despite these gains, Ocado continues to face broader challenges in selling its warehouse technology globally following recent facility closures in North America.
Shares in Ocado rose 2.3 percent to 189p on Tuesday following news of the resolution.
