Ocado has threatened legal action if the dispute remains unsettled. Credit: Tupungato via Shutterstock.

A disagreement has arisen between British supermarket chain Marks & Spencer (M&S) and online grocery retailer Ocado regarding a £190m ($240m) final payment tied to their online grocery joint venture (JV), Ocado Retail.

The root of the issue lies in a 2019 agreement where M&S acquired half of Ocado Retail for an initial £562m. This agreement included a performance-based final payment of £190m, contingent on meeting undisclosed targets.

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While Ocado Retail did not meet these targets in 2023, the two companies have opposing views on the final payment.

Ocado argues that the Covid-19 pandemic significantly impacted its business, forcing it to make decisions that deviated from the original plan.

It believes these unforeseen circumstances warrant a revision of the performance criteria and is seeking a ‘substantial sum’ exceeding the £28m suggested by auditors.

M&S, however, maintains that Ocado Retail’s financial performance in 2023 did not meet the contractual requirements for the full payment.

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It says it remains committed to the JV’s turnaround strategy but believes the current payment reflects the venture’s actual performance.

If a settlement cannot be reached, Ocado has threatened legal action. M&S, on the other hand, says it remains focused on working collaboratively with Ocado to resolve the issue.

Despite the disagreement, both companies remain invested in the success of Ocado Retail.

Ocado Group‘s overall financial performance improved compared to the previous year, driven by its technology solutions business.

The outcome of this dispute remains uncertain. If an amicable resolution cannot be reached, the possibility of litigation looms, potentially impacting the future of the JV.