Morrisons to offer online shopping in Ocado deal

Morrisons, the UK's fourth largest supermarket chain, is going into business with internet grocer Ocado.



Morrisons says it has agreed a deal that will enable it to launch an online grocery service by January 2014.

The delivery vans will carry the Morrisons brand, with logistical support by Ocado from its Dordon distribution centre in the Midlands.

At the moment, Morrisons is the only one of the big four chains not to offer online shopping.

Chief executive Dalton Philips told BBC Radio 4's Today programme: "This is a very good transaction for both parties. We're going from a standing start to the fast lane in the blink of an eye."

Morrisons will make an initial payment of £170m to Ocado to acquire the Dordon centre, then a further £46m to expand it and establish a delivery network.

Morrisons expects a return on its investment within three or four years, Mr Philips said.

Neil Saunders, retail analyst with Conlumino, told the BBC: "This is a transforming deal for Morrisons that will allow them to make the move online in an efficient and effective way that is easily scalable. In many ways, it's the best possible solution for them.

"It is a good deal for Ocado, too, in that it broadens its business model and provides it with an injection of capital for future investment. The unknown in the mix is the reaction of Waitrose."

The unknown in the mix is the reaction of Waitrose.

You can bet that they're not happy.

Arrested Morrisons executive Paul Coyle held roles ‘key to Ocado deal’

The Morrisons executive arrested for alleged insider dealing in the online grocery group Ocado was a director both of the supermarket’s internet delivery company and its property arm.

Paul Coyle was named yesterday as the man arrested on suspicion of buying a stake in Ocado before it was made public that Morrisons was going to sign a deal which boosted the internet grocer’s share price.

While his main position at the company was as its group treasurer and head of tax, filings with Companies House reveal he also held directorships of companies called Wm Morrison Online Ltd, based at its headquarters in Bradford, and Wm Morrison Property Investments Ltd, based in Glasgow.

The names of the companies suggest both may have been involved in the deal, as it included a property transaction whereby Morrisons would buy an Ocado distribution centre in Dordon, Warwickshire. Morrisons declined to say what either company’s role was.

Mr Coyle’s CV, as listed on the Yatedo website, states how his job at Wm Morrison includes providing support services “on PAYE and other transactional taxes”, as well as “transactional banking”. The former KPMG tax manager joined Morrisons from the RAC, where he had been head of tax, in 2006.

While his Yatedo entry states he was president of the Student Union at Dundee University between 1987 and 1988, the current president denied this, saying Mr Coyle only ran the student’s representative council. Yatedo’s source for the claim is not clear.

Mr Coyle was arrested in Harrogate at the behest of the Financial Conduct Authority (FCA), which has never named him. The organisation said only that the man was a 49-year-old employee of Morrisons.

Documents show that he resigned as a trustee and director of Harrogate District Hospice Care, known locally as the St Michael’s Hospice, last month, four days after his arrest following a premises search by the North and West Yorkshire Police.

Tony Collins, St Michael’s chief executive, said: “He informed us before Christmas that he wished to step down from this voluntary position but gave no reason for this decision.”

The FCA said insider dealing is a criminal offence punishable by a fine or up to seven years imprisonment. It has not said how many Ocado shares were allegedly purchased.

The arrest followed an investigation into events surrounding the announcement of the Ocado deal, which was made to the stock market last March. Prior to the announcement, Ocado’s shares were trading at 100p-130p. The deal transformed investors’ view of the company, leading to speculation it could do deals with other supermarket chains looking to push into UK online groceries like Carrefour of France. Last night the shares were trading at nearly 520p.

Mr Coyle could not be reached, while Morrisons declined to comment. North Yorkshire Police referred calls to the FCA which also did not comment.