Marks and Spencer Group plc (LSE:MKS) entered into an agreement to acquire 50% stake in Ocado Retail Limited from Ocado Group plc (LSE:OCDO) for approximately £750 million on February 27, 2019. Ocado will receive consideration of approximately £750 million comprising approximately £560 million in upfront cash and a deferred cash payment of approximately £190 million, plus interest, payable five years after completion depending on the satisfaction of certain financial and operational targets. Post completion Ocado Retail Limited will operate as a joint venture with 50% stake being owned by Marks and Spencer Group plc and the remaining 50% stake being owned by Ocado Group plc. The transaction will be primarily financed by equity. The Board intends to conduct a Rights Issue to raise up to approximately £600 million, which will be launched in due course, and which is fully underwritten on a standby basis by Morgan Stanley. The joint venture will be supported by a new partnership for solutions services underpinned by Ocado Smart Platform and the provision of branding and sourcing from M&S. The join venture will trade as Ocado.com but benefit from access to M&S's brand, products and customer database from September 2020 at the latest. Reuven B Young, Dan Hirschovits and L. Louis Goldberg of Davis Polk & Wardwell LLP acted as legal advisor to Ocado Group plc.

For the year ended December 2, 2018, Ocado Retail Limited reported an EBITDA of £84.4 million and gross assets of approximately £160 million. Ocado and M&S will have equal shareholder representation on the Board. For at least five years, Ocado has the ultimate right to appoint the Chief Executive Officer and M&S has the right to appoint one of its shareholder directors as Chair. The management team of the join venture, other than the Chief Executive Officer, will be appointed by the joint venture Board, with Lawrence Hene, currently Ocado's Commercial Director, being appointed as interim Managing Director of the joint venture to lead its establishment.

The transaction is subject to approval from Ocado's shareholders. If Ocado does not meet its shareholder approval threshold, it will reimburse M&S for costs incurred up to that date, subject to a cap of £12 million. The transaction is expected to close on August 5, 2019. The proceeds will enable Ocado Group to fund fully the development of all Customer Fulfilment Centres currently committed with Ocado Solutions' partners. Significant potential synergies for M&S Food estimated of at least £70 million per annum to be achieved by the third year following completion. Nick Reid, Hadleigh Beals and Fiona McHardy of Centerview Partners acted as financial advisors to Ocado Group plc. Mark Sorrell, Jimmy Bastock and Sara Hanlon of Goldman Sachs International acted as financial advisors to Ocado Group plc. John Papanichola, Murray Cox, Michael Chapman, Aleezeh Liaqat, Thomas Potter, John Papanichola, Oliver Moir, Rory Botros, Laura Houston, John Nevin, Laura Houston, Emma Haywood, Matthew Tobin, David Hay, Xian Wei Yeo, Gareth Miles, Kyle O'Sullivan, Tomas McGrath, Lisa Wright, Katie Hudson, Jonathan Fenn and Katherine Flower of Slaughter and May acted as legal advisors to Ocado Group plc. Nigel Higgins, Niall McBride, Nigel Himsworth, Francis Burkitt and Shannon Nicholls of N M Rothschild & Sons Limited acted as financial advisors to Marks and Spencer Group plc. Andrew Foster, Martin Thorneycroft, Nick Bishop, Angus Millar and Richard Brown of Morgan Stanley & Co. International plc acted as financial advisors to Marks and Spencer Group plc. As of May 21, 2019, The shareholders of Ocado Group approved the transaction.

Marks and Spencer Group plc (LSE:MKS) completed the acquisition 50% stake in Ocado Retail Limited from Ocado Group plc (LSE:OCDO) for approximately £760 million on August 5, 2019. Marks and Spencer Group plc paid an initial consideration of £560.9 million in cash and will pay contingent consideration of £202.4 million. Ocado Retail Ltd will continue to trade as Ocado.com and M&S products will be available on the platform from September 2020 at the latest, providing customers with access to the full M&S food range for the first time. Melanie Smith will become Chief Executive Officer of Ocado Retail. The directors of Ocado Retail Ltd are Steve Rowe and Stuart Machin, respectively Chief Executive Officer and Food Managing Director of M&S and Tim Steiner and Duncan Tatton-Brown, respectively Chief Executive Officer and Chief Financial Officer of Ocado. M&S has appointed Tim Steiner as Chair of Ocado Retail Ltd.