Marks & Spencer taps investors and cuts dividend to fund Ocado deal
British retailer to enter joint venture in 50% stake deal with supermarket group that will give it a full online food delivery service
London — British retailer Marks & Spencer (M&S) will raise cash from investors and cut its dividend to finance a joint venture with online supermarket pioneer Ocado that will give M&S a full online food delivery service for the first time. M&S, Britain’s best-known stores group, said on Wednesday it will buy a 50% share of Ocado’s UK retail business for up to £750m, financed by a £600m rights issue of shares and a 40% cut to its dividend. Shares in M&S were down 9% in morning trade, reflecting the equity raise, the dividend cut and fears it may have overpaid, while Ocado’s were up 1.3%. Both stocks had risen sharply on Tuesday after talks between the companies were confirmed following months of speculation. M&S CEO Steve Rowe dismissed the suggestion that Ocado had got the better deal, which values the joint venture at £1.5bn. 'Fair price' “We think we’re paying a fair price and I think Ocado do too,” he told reporters, adding the deal “transforms the UK food online market”. As well...
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