RE: Buying4 Nov 2021 15:12
Discern,
Wanted to elaborate more on my thoughts re the possibilities of an Ocado takeover. Chilting outlines that it's not an obvious takeover target. He's talking mainly from a private equity perspective I believe. It's an unlikely private equity target because of the large cash flow needed to put into the business in the intervening years before the entire Ocado powered CFC network is built around the world.
To growth companies, and those with foresight, Ocado is a very attractive company to acquire. It's believed that Ocado receive roughly 4-5% of every £1 worth of goods that is delivered to customers using Ocados technology. When Kroger have 20 CFCs+ and there are another 20 or so CFCs built around the world you are then taking about a huge positive cash flow. In time Ocado will become a cash cow. Until then though the company will need yearly significant investment.
Ocado would be attractive to the likes of Amazon/Uber and any of an array of US tech companies who are focussing on online grocery logistics.
Also Ocado would be attractive to many Chinese tech/logistics companies. If they bought Ocado they would instantly have a global network and could develop Ocados technology for use in China.
Kroger could be interested, Google could be interested. The latest technology that Ocado have developed is an end to end fully automated robotic online grocery system (robotic picking is being developed using kindred systems) It's akin to an operating system for the industry. Anyone acquiring the operating system could then replicate it the world over.
Ocado does own half of Ocado retail UK. Private equity may well bid for that when it's put up for sale. Ocado retail is already generating good profits. The UK network is far ahead of the development of the rest of the world CFCs . The value of half of Ocado retail UK is around £1-1.5bill. Could be more.
Of course there is the Autostore court case. I believe Ocado will come through that with limited damage. If they do then the possibilities and focus on an Ocado takeover will be heightened in the market..
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