Ocado slashes price of share issue

Ocado has been forced to slash the price of its share issue to 180p after weeks of criticism that the online grocery delivery company’s valuation was too high.

Ocado had originally planned to price its shares at between 200p and 275p. This would have valued the business at £800 million-£1.1 billion, a price that analysts said was too high given that the business had never made a profit and also was dependent on its relationship with Waitrose.

Dealings on the London Stock Exchange are due to start on 26 July 2010, with conditional dealing (placing a deal before the shares are fully listed) beginning today.

The company said in its stock market announcement that directors and persons connected with them would own around 20% of Ocado's shares.

Customer share option

Ocado's management had originally offered shares to loyal customers, but it was reported that just ‘several thousand’ of Ocado’s these 1.6 million registered customers had taken the option to buy shares, raising less than £10 million, far short of the £50 million maximum directors had set.

A report in the Sunday Telegraph had suggested that the firm’s directors were warned by their own bankers that a share option for customers could undermine the stock market launch