The Ocado Group and M&S have agreed to set up a new 50-50 joint venture which they claim will “transform” online grocery shopping in the UK. The joint venture will be called Ocado and will deliver M&S products from September 2020, when Ocado’s deal with Waitrose ends.

M&S will buy a 50% share of Ocado’s retail business for £750m. M&S will fund the deal by selling £600m of shares and by reducing its dividend pay out to shareholders by 40%.

Chief executive at Ocado, Tim Steiner said: “This is a transformative moment in the UK retail sector with the combination of two iconic and much-loved retail brands set to provide an unrivalled online grocery offer.

“We believe that this is the best outcome for customers, offering even greater range, service, quality and value; the best outcome for our Ocado Solutions partners, creating a stronger platform from which to innovate and develop our unique and proprietary technology; the best outcome for Ocado Solutions with a further endorsement from another leading global retailer; and the best outcome for our financial stakeholders, unlocking the significant value embedded in Ocado Retail.”

Chief executive of M&S, Steve Rowe added: “I have always believed that M&S Food could and should be online. Combining the strength of our food offer with leading online and delivery capability is a compelling proposition to drive long-term growth.

“Our investment in a fully aligned joint-venture with Ocado accelerates our food strategy as it enables us to take our food online in an immediately profitable, scalable and sustainable way.”