There are a number of stories in the media speculating about the possibility that Amazon could acquire Ocado, the UK-based technology and e-commerce company.
The BBC writes that "Ocado was a market darling during the pandemic, ranking as the UK's most valuable retailer, despite commanding a tiny fraction of purchases.
"But views of the company have soured sharply as it grapples with the return of in-store shopping and rising prices.
"Its share price has plummeted about 80% from its peak in 2020.
"Analysts said that drop could make it a potentially attractive target for acquisition.
"Under UK takeover rules, companies seriously exploring such moves typically have to disclose their interest to investors.
"Amazon has been pushing to expand its grocery business for years, buying up Whole Foods and experimenting with till-less stores. In the UK, it owns a 16% stake in Deliveroo, a deal that only barely escaped objection from the UK competition authority."
CNBC notes that while most of the speculation has centered on Amazon, other companies also may target Ocado. The story says that "reports had circulated in December saying that Ocado’s plans to expand had been put on ice, then in April the company announced it would be closing its oldest automated warehouse in Hatfield, north of London." All of which may add up to a company that is ripe for acquisition.
Amazon and Ocado have not commented on the speculation.
- KC's View:
I cannot even imagine that regulators on either side of the pond would let such a deal happen. I know it could be seen as the kind of big deal that would jump-start Amazon's grocery business, but it would allow Amazon to have its fingers in way too many pies.
Plus, it is hard to imagine how such an acquisition would impact Ocado's deal with Kroger to build and operate automated warehouses all over the US. Would Kroger really want to be in business with Amazon to that extent?
I suspect this is a deal invented by a bored stock analyst looking to make a short-term killing in the market.