British grocery delivery platform Ocado on Tuesday announced a tie-up with South Korean giant Lotte Shopping, sending its shares soaring in London.
Ocado’s stock surged more than 30 percent in morning trade on the London Stock Exchange after the announcement.
The two firms said in a joint statement that they would work together to develop Lotte’s online business in South Korea.
That includes creating a network of order processing centres across the country, with the first to open in 2025.
Ocado will also set up order points in stores operated by Lotte from 2024.
“Lotte will pay Ocado Solutions certain fees upfront and during the development phase, then ongoing fees linked to both sales achieved and installed capacity”, the statement read.
No further financial details were given.
Ocado said it expected the deal to create “significant long-term value to the business”, as well as give it another foothold in Asia Pacific.
“The impact of this transaction should be negligible on earnings in the current financial year as no cash fees will be recognised in revenue until operations commence,” it added.
Lotte Group is South Korea’s fifth-biggest conglomerate and operates in the food, retail, chemical and hotel sectors.
Its biggest affiliate, Lotte Shopping has more than 1,000 stores, hypermarkets, supermarkets across the country, and is also present online.
In 2021, its annual revenue was 15.6 trillion won ($11 billion).
The announcement comes after Lotte’s biggest partner, US supermarket giant Kroger, signed a deal to buy its competitor Albertsons.
Ocado announced at the end of July a £212.5-million loss and a slump in first-quarter revenue compared to the same time last year, when it saw sales boosted by coronavirus lockdown restrictions.
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