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Marks & Spencer grows its business through a Joint Venture

Marks & Spencer and Ocado have recently announced that they will be participating in a joint venture allowing shoppers to purchase the full range of Marks & Spencer food products online for home delivery. 

Marks & Spencer had been considering online sales for some time but had neither the software nor the infrastructure to implement this service. Meanwhile, Ocado describes itself as the ‘the world’s largest dedicated online grocery retailer’ and has spent the last 19 years in partnership with Waitrose offering and delivering its products.

The joint venture between the two makes good business sense – Marks & Spencer can use Ocado’s expertise in online sales whilst Ocado benefits from Marks & Spencer’s client base. It has been reported that Ocado has jumped on the FTSE 100 after having confirmed its annual forecast.  Joint ventures are a useful way of pooling resources and spreading risk between companies that wish to expand their businesses but do not necessarily have the time, money or expertise to achieve this as quickly or successfully on their own.

Joint ventures can be domestic or cross-border and cover a wide range of business activities. Any joint venture agreement must be bespoke to the needs and requirements of the participants involved and careful drafting is required to ensure that the venture will run as smoothly and efficiently as possible and to cover all eventualities.

It is anticipated that Marks & Spencer will purchase a 50% share of Ocado’s UK retail business.  Those drafting the joint venture agreement will need to be particularly diligent and take a forward looking approach. Disputes can often arise between the participants and those who share decision making rights equally will need provisions inserted into the agreement to deal with disputes and deadlock situations. Exit provisions should be carefully considered.

A robust joint venture agreement can help to avoid potentially costly and protracted litigation in the event of deadlock, which could have catastrophic effects on the venture. The Corporate team at Axiom Stone Solicitors have a wealth of experience in structuring joint ventures and the negotiation and drafting of both domestic and cross-border joint venture agreements. If you are considering growing your business by way of joint venture and require further information you can contact our Corporate team by telephone or email: