London headquartered Marks and Spencer Group Plc is a leading global retailer, engaged in the business of distribution of its own brand apparels, food and other home products through its stores and online platform. Its areas of operation are divided into segments like the UK and International. The retailer has around 1,380 stores around the world.
Recently (as on February 28, 2019), the group has announced its 50-50 joint venture arrangement with Britain’s leading pure-play online grocer Ocado Group Plc for a total consideration of £750 mn, which included deferred consideration of up to £187.5 mn plus interest.
However, the deal is an effective solution to an organizational gap in the LSE: MKS business model and indicates a bold step to take stake into a Market leading online grocer.
The deal is like bringing the best together, and it is going to make substantial changes in Britain online grocery shopping. Under the agreement, Marks & Spencer is going to buy 50 per cent share of Ocado’s UK retail business, which will get support from Ocado Smart Platform.
This strategical move will unlock growth catalyst for M&S Food through a cost-effective, ascendible presence in the online grocery Market. The deal will create long-term value for both the company and shoppers will benefit from the wider range in Britain food retail.
M&S has around 12 mn food shoppers, which is going to benefit the JV.
The deal will be financed by the equity and M&S board could exercise the right issue to raise up to £600 mn.
Recently, some market experts have upgraded its rating for the LSE: MKS as it sees a paradigm shift has taken place at the M&S. The restructuring in corporate philosophy in combination with a joint venture with the Ocado is imperative to understand why investment in the LSE: MKS is increasing, the Citigroup added.
However, on a yearly basis, the stock was down by 5.2 per cent, but on a year-to-date basis, shares of M&S have gained around 11 per cent.
Daily Price Chart (as on May 14, 2019), before the Market close. Source: Thomson Reuters.
At the time of writing (as on May 14, 2019, at 04:29 PM GMT), shares of M&S were quoting at GBX 275.0 and 4.4 points or 1.5% higher against the previous closing level. From the volume standpoint, the 5-day average daily volume traded on the LSE was 3.45 per cent above the 30-day average volume traded on LSE. The outstanding Market capitalization of the stock stood at £4.48 bn and ranks it among the large-cap companies listed on the LSE.
During the past year, shares of M&S have touched a 52w high of GBX 316.6 and a 52w low of GBX 240.0.