Ocado Group Plc shares gained after Norwegian robotics company AutoStore Holdings Ltd. agreed to pay the UK company £200 million ($257 million) to settle a dispute over patent infringements regarding automated warehouses.
(Bloomberg) — Ocado Group Plc shares gained after Norwegian robotics company AutoStore Holdings Ltd. agreed to pay the UK company £200 million ($257 million) to settle a dispute over patent infringements regarding automated warehouses.
AutoStore will make the payment in 24 monthly installments, starting this month, the companies said Saturday, agreeing to withdraw their legal actions against each other. Ocado rose as much as 12% in London, while AutoStore fell as much as 7.7% in Oslo.
The two firms have been locked in a global legal fight for years over Ocado’s warehouse system, where robots move thousands of customer orders as they glide around a chessboard-like grid.
“This represents a huge win for Ocado,” wrote William Woods, an analyst at Sanford C. Bernstein.
The agreement gives each party access to the other’s patents from before 2020 to use or develop their own products, the companies said. Ocado retains exclusive patents over a product called the Single Space Robot.
What Bloomberg Intelligence Says:
“Ocado’s litigation settlement with AutoStore gives the former £200 million in 24 monthly payments and validates its technology investment, as well as giving each side access to the other’s patents, except Ocado’s single-space robot. It also more than fills an expected shortfall in the final £197 million payment from joint-venture partner Marks & Spencer. Ocado’s fiscal 2023 capital spending is expected to be down 30% to £550 million.” — Charles Allen, senior retail analyst
While there are about 20 companies worldwide that handle fulfillment of online grocery orders, the cube-shaped automation systems of Ocado and AutoStore are seen as potential winners because they save a lot of space, analysts say.
The two companies have been quarreling over patents in various jurisdictions since 2016, but the battle heated up just before Ocado signed an agreement for its Smart Platform with Kroger Co., one of the biggest US supermarket chains.
While the price is hefty, the agreement means an end to AutoStore’s legal costs on this matter, which have reached almost $63 million over the past two years, wrote Lucas Ferhani, an analyst at Jefferies.
“The group can now fully focus on the commercial development of its technology and the significant opportunity available,” he wrote.
(Updates with analyst comment in third paragraph)
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