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March 10, 2011

UK/US: Morrisons buys stake in US online grocer FreshDirect

Morrisons, the UK's fourth-largest food retailer, has snapped up a stake in US online grocer FreshDirect.

Morrisons, the UK’s fourth-largest food retailer, has snapped up a stake in US online grocer FreshDirect.

The UK firm has paid GBP32m (US$51.6m) for a “circa” 10% stake in FreshDirect, which supplies customers in New York, New Jersey and Connecticut.

In recent months, Morrisons has faced speculation about its online ambitions in the UK and has been linked to Ocado, the internet grocer that listed last summer.

However, Morrisons said today (10 March) that the investment in FreshDirect would “play a key role” in the development of its online food business in the UK. Under the plans, FreshDirect is also set to receive a “minority economic interest” in the London online operation that Morrisons is planning.

Morrisons said FreshDirect shared its “strong focus” on “quality fresh foods, outstanding customer service and competitive pricing”.

The terms of the deal will see Morrisons CEO Dalton Philips join the FreshDirect board, while the UK retailer will send a team to the US to learn more about the online firm’s “profitable e-commerce model”.

Philips said: “I have seen retailers all over the world. Few have inspired me as much as the team at FreshDirect, a highly successful and profitable food retailer with a track record of terrific customer service. What we learn from FreshDirect will be invaluable as we plan our own profitable e-commerce business for the UK.”

FreshDirect founder and CFO Jason Ackerman said his firm and Morrisons had a “deep passion for great customer service and fresh food”.

He added: “This new partnership and capital strengthens our ability to support our strong growth and continued expansion.”

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