Ocado Group Plc shares jumped as much as 47% in London, the most in more than five years, following a Times report on “speculation of bid interest” from technology firms such as Amazon.com Inc. in the British online grocer.
The report, which did not specify the source of the information and was released late Wednesday, said Amazon and several other tech “heavyweights” were considering the merits of a bid worth 800 pence per share for the company. Ocado’s shares rose to as high as 631 pence on Thursday morning, before paring some of the advance.
Ocado and Amazon UK declined to comment when contacted by Bloomberg News. Shares in European delivery firms such as HelloFresh SE, Delivery Hero SE and Just Eat Takeaway.com NV also gained.
Bearish speculation in Ocado, which builds robots and software that help deliver online grocery orders, is among the highest in the UK’s benchmark FTSE 100 Index. Shares out on loan, an indication of short interest, represent about 15% of Ocado’s free float as of Tuesday, according to data from S&P Global Market Intelligence.
“A deeper consideration of the strategic logic and the actual likelihood of an official takeover approach will have to wait for more details,” Jefferies analyst Giles Thorne wrote in a note. Jefferies has had a hold recommendation on Ocado since at least December 2021.
Even with today’s gains, shares in Ocado have still lost about two-thirds of their value since the end of 2021 amid a selloff in growth stocks. The stock soared in 2018 on a landmark deal to build warehouses and license software to US supermarket chain Kroger Co., boosting the grocer’s credentials as a technology company. Ocado has partnerships with several grocers, but investor focus has shifted to profitability as demand for automated warehouses slows.
“Ocado’s hopes of becoming an online groceries partner to businesses across the globe have only had limited success,” Danni Hewson, head of financial analysis at AJ Bell, said in emailed commentary. “Shareholders may be open to a bidder putting them out of their misery.”
(Updates stock price moves and adds analyst comment in final paragraph. A previous version of the story corrected the reference to the stock move in the second deck head.)