Ocado Group has ended its pursuit of a £190 million payout from Marks & Spencer, concluding a prolonged dispute over the financial terms of their joint venture, Ocado Retail. The partnership, established in 2019, was designed to enable M&S to sell food online for the first time through a £750 million deal. However, the venture did not meet the financial targets set out in the original agreement, which were tied to a final payment from M&S to Ocado.
Under the contractual terms, M&S was obliged to pay Ocado a £190.7 million instalment contingent on Ocado Retail achieving certain performance targets by November 2023. The failure to meet these benchmarks meant the final payout was withheld, prompting Ocado’s chief executive, Tim Steiner, to threaten legal action. Nevertheless, both parties have now agreed to drop the legal challenge without any payment being made.
The disagreement reflected differing valuations of the contingent payment, with Ocado reducing its “fair value” of the payout in financial statements, while M&S attributed zero value to the liability. Sources familiar with the matter described the dispute as effectively over, with no further claims expected.
Despite the resolution of the payout issue, negotiations between the two companies continue over the future of Ocado Retail’s expansion plans. M&S has reportedly declined to commit to building new warehouses or increasing order volumes at existing facilities until issues related to commercial terms are resolved. The retailer is seeking better operational efficiencies, system improvements, and more favorable terms regarding how Ocado charges for capacity, as well as revisions to several technical agreements.
Both companies have emphasized a cooperative relationship. An M&S spokeswoman stated that discussions are ongoing and positive, emphasizing commitment to realizing the full potential of the partnership. Ocado’s spokesperson highlighted that Ocado Retail remains the fastest-growing grocer in the UK and has recently achieved profitability across key metrics. The company expects to continue expanding order capacity and growing the business in collaboration with M&S.
The Ocado-M&S joint venture represents a significant development in the UK grocery sector, combining Ocado’s technological expertise with M&S’s food retail capabilities. While challenges remain in aligning commercial terms and operational strategies, both companies appear intent on maintaining the partnership’s momentum.