Ocado shares dropped sharply this morning following weekend reports that Waitrose was prepared to take legal action against the online grocer over its discussions to help Morrisons develop an online service.
Waitrose managing director Mark Price told The Telegraph that if Ocado signed a contact with Morrisons, he would want his legal team to study it immediately to ensure there were no breaches of contract.
Price explained that he would never knowingly sign a contract with Ocado that agreed to the online grocer working with a rival.
The supply agreement between Ocado and Waitrose runs until 2020 but the contract has a break clause in 2017.
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The news sent shares in Ocado nose-diving 11% in trading on Monday morning. The shares had climbed sharply at the end of last week after Ocado sought to reassure investors that its supply agreement with Waitrose was not under threat.
At the Ocado annual general meeting on Friday, the company was also hit by a shareholder revolt over executive pay.
Some 23.5% of investors voted against its pay rewards for executives. The Association of British Insurers has attacked Ocado’s long-term incentive plan for being opaque.
Date: May 13, 2013