Ocado Group CEO Tim Steiner believes the technology company has “a very solid case to get full payment” from M&S over its joint venture, Ocado Retail.
Earlier this week, M&S put its final consideration payment to Ocado Group on hold after the online supermarket tie-up missed key performance targets. Under the contract, full payment would have been triggered automatically if the targets had been achieved.
Ocado Retail was first formed as a 50:50 joint venture between the two companies in 2019 and as part of the deal, M&S was due to pay Ocado its last payment of £190.7m by August.
When questioned during the company’s results today about whether Ocado Group would consider suing M&S, Steiner said: “We’re happily having a conversation with our partners. We would much rather solve this in a nice and constructive way, which is what we’re working towards doing.
“We are very confident that we are owed a substantial sum of money and ultimately, I hope we’ll never get there, but we will not walk away from that sum of money.”
Subscribe to Grocery Gazette for free
Sign up here to get the latest grocery and food news each morning
In its accounts Ocado said based on the principles of IFRS 9 accounting rules £28m had been estimated as a “fair value” of the consideration. However, Steiner said this figure was a “ludicrously low number” and that it projected an “extremely pessimistic outlook”.
The company hopes to get more than this amount through a formal litigation process or settlement and has engaged specialists to “support the identification and quantification of proposed adjustments to the contingent consideration target”.
Despite this Steiner remained adamant that Ocado Group has a “fantastic working relationship” with M&S.
“Together we are trying to build a multibillion-pound business, it would be most sensible for us to come to a a negotiated settlement and that’s something that we would be very willing to do.”
It comes as Ocado Group’s full-year losses narrowed to £394m as the technology company and its retail business returned to profit.
Ocado Retail posted adjusted EBITDA of £10.4m in the 53 weeks to 3 December and according to the business, its ‘Perfect Execution’ programme, resulted in a “strong trading performance and cost efficiencies in all areas of the business.”
