U.K. supermarket chain M&S and online grocery specialist Ocado have announced a £750 million deal to form a joint venture and "transform online grocery shopping" for British consumers.

Under the deal, M&S is acquiring a 50% share of Ocado's U.K. retail business, which will be supported by Ocado Smart Platform ("OSP"), for a total consideration of up to £750 million, including a deferred consideration of up to £187.5 million, plus interest.

The venture will work as a "true partnership aiming to create the UK's leading online grocery business", Ocado said. 

Ocado said the joint venture combines the strength of M&S's brand and its leading food quality and innovation with Ocado's unique and proprietary technology to create an "unrivalled online offer".

It added the deal would benefit existing and new U.K. customers and suppliers.

The joint venture will trade as Ocado.com but benefit from access to M&S's brand, products and customer database from September 2020 at the latest, following the termination of the current Waitrose sourcing agreement and migration of the venture's sourcing to M&S.

"I have always believed that M&S Food could and should be online," said Steve Rowe, M&S CEO. "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."

He added this was a "transformational step forward" in shaping the future of M&S and in becoming a "digital first retailer" with at least a third of the business online.

Tim Steiner, Ocado CEO said: "The combination of Ocado and M&S will allow us to grow faster, add more jobs, and create more value, as we lead the channel shift to e-commerce here in the UK. We are very excited by the many opportunities ahead."

In May last year Ocado announced a partnership with U.S. supermarket chain Kroger to build e-commerce infrastructure in the North American country.