Slaughter and May is advising Ocado Group plc ('Ocado') on a 25-year agreement with Wm Morrison Supermarket plc ('Morrisons') to license certain technology, logistics and distribution services to enable Morrisons to launch and develop its online grocery business. In addition, Ocado has agreed to sell to Morrisons assets and a half of its existing capacity in its Dordon Customer Fulfilment Centre (the 'Dordon CFC').

Ocado has also agreed to sell Last Mile Developments Limited, a subsidiary which owns the Dordon CFC, to Morrisons, and has taken a 25-year lease back of the property. Morrisons has agreed to procure the discharge of approximately £80 million of internal and external debt of Last Mile Developments Limited.

The agreement, which was announced on 17 May 2013, will provide Ocado with the opportunity to further develop its technological and logistical excellence and to accelerate the growth of Ocado.com, improve operating efficiency, create a template for licensing its superior technology, and allow it to repay in full the debt outstanding under its capex facility of £85 million.

Morrisons.com will be entirely separate from Ocado's online business, with its own customers and product range. Morrisons' customers will order from Morrisons using a Morrisons.com website, selecting products sourced and ranged by Morrisons, fulfilled and delivered in a Morrisons owned and liveried van.

The agreement is subject to the approval of Ocado's shareholders and completion of the agreement is expected to occur during the third quarter of 2013.

Ocado is one of Britain's leading online grocers, and at the forefront of the development of online shopping and technology. Morrisons is the UK's fourth largest food retailer.

CONTACTS

Corporate and Commercial: Robert Stern (partner), Jonathan Wiseman (associate), Alex Dustan (associate); Real Estate: John Nevin (partner), Oliver Moir (associate); Tax: Gareth Miles (partner), Tom Jarvis (associate); Competition: Isabel Taylor (partner), Cleo Alliston (associate); IP/IT: David Ives (partner), Oliver Savage (associate), Adam Baldwin (associate); Financing: Matthew Tobin (partner), David Hay (associate)

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