Ocado’s shares are popping, after rumours that Amazon is preparing a takeover bid for the online grocery retailer.
According to the Daily Mail’s Market Report, rumours abound in the City of London that Amazon has “advisers beavering away on a potential approach to the British online supermarket.”
The speculation has sent Ocado’s shares jumping on Tuesday morning, and as of 10:20 a.m. GMT (5:20 a.m ET), the company’s stock is up by 18% to £2.85 per share. Here’s how shares looked a few minutes ago:
Speculation about Ocado being bought by Amazon has been around for a while now, and several major banks, including Credit Suisse and Goldman Sachs have already expressed their belief that Ocado shouldn’t try to resist if Amazon were to make them an offer.
The speculation is being driven by the fact that Amazon is looking to expand its Pantry service and offer customers more products. Pantry offers a service that is essentially identical to Ocado’s service, but obviously backed up by Amazon’s multi-national, corporate behemoth.
Simply put, if Amazon wants to take on Ocado, it will win.
Amazon Pantry currently offers customers a limited-range of dry groceries with around 4,000 items on offer. Each box can hold up to 20 kg. Orders are £2.99 ($4.27) for the first box and 99p ($1.42) for subsequent boxes, and are available to Amazon Prime customers.
Ocado’s stock price has been in a horrible rut in the last six months, falling from a peak of £4.70 ($6.72) per share in July 2015, to around £2.43 ($3.48) on Monday. As Business Insider’s Jim Edwards pointed out earlier in the month, a lot of Ocado’s problems are down to worries about Amazon. However, Goldman Sachs says that Amazon’s attack could end up helping Ocado in the long run.
Business Insider has reached out to Ocado and Amazon for comment on any potential takeover approach, and will update this story if and when we hear back.
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