LONDON (Reuters) - Ocado (LON:OCDO), the British online supermarket and technology group, will "most likely" reach a negotiated settlement with retailer Marks & Spencer over a final payment for M&S (LON:MKS)'s share of the Ocado Retail joint venture, Ocado's boss said on Thursday.
In 2019, M&S agreed to pay up to 750 million pounds ($949 million) for its half of the jv, which took M&S food online.
A final payment, contingent on the jv's performance in its 2022/23 year, is due in August, with the two sides wrangling over whether it should be paid or not.
In its annual results statement Ocado conceded that the jv's actual performance in 2022/23 was below the target required for automatic payment of the final 191 million pounds.
However, it said it had identified "significant decisions and actions" taken by Ocado Retail's management that meant the target should be adjusted.
To comply with accounting rules Ocado cut the "fair value" of the anticipated consideration in its accounts to 28 million pounds, which Ocado CEO Tim Steiner said was a "ludicrously low number".
"The contract allows for a process of adjustment of targets ... which is underway at the moment," he told reporters.
"It would be most sensible for us to come to a negotiated settlement and that's something that we would be very willing to do," he said, noting Ocado's relationship with M&S was "extremely strong".
Ocado's results statement did, however, raise the prospect of "formal legal proceedings" if no agreement is reached.
"Ultimately I hope we'll never get there, but we will not walk away from that sum of money," added Steiner.
A spokesperson for M&S said of the payment: "Our advice is that the financial performance of Ocado Retail means the criteria for the performance payment was not met."
($1 = 0.7902 pounds)