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Important information: The value of investments can go down as well as up so you may get back less than you invest. Investors should note that the views expressed may no longer be current and may have already been acted upon. This is a third-party news feed and may not reflect Fidelity’s views.

M&S withholding multi-million pound payment to Ocado over performance failures

(Sharecast News) - Ocado slumped on Monday following a report over the weekend that Marks & Spencer is withholding a multimillion-pound payment to the group after their grocery delivery venture missed key performance targets. The companies joined forces in 2019 to create Ocado Retail, a £750 million tie-up that gave Ocado customers access to M&S food.

Under the terms of the deal, M&S is due to pay Ocado a final instalment of £190.7m by August. The payment is contingent on Ocado Retail's performance against an undisclosed target in the year to November 2023.

According to The Times, it is understood that M&S is still in negotiations with Ocado over the payout as performance hurdles have "not been met".

The final payment is binary, meaning that M&S must pay the sum in full or not at all. There is a mechanism in the contract, however, for "adjustments" to be made if both sides agree.

There has been speculation over how much M&S would end up paying Ocado after the online grocer cut the "fair value" of the payout by another £17m to £78m in November, while M&S cut it to zero. Insiders told The Times there was unlikely to be an update on Thursday, when Ocado publishes its full-year results, as talks are still continuing.

At 1105 GMT, Ocado shares were down 5.5% at 499.40p.

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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