Marks & Spencer seriously considered a buy out of online grocery retailer Ocado before it floated on the London Stock Exchange (LSE) it has been revealed.

M&S walked away from a deal in which it looked “very closely” at buying the company after talks held between management collapsed.

The talks took place more than a year before Ocado decided to float on the LSE in July and were led by then by chief executive Stuart Rose and finance director Ian Dyson, the Daily Mail reports.

Rose is due to leave as chairman on 4 January and it is rumoured key management changes could follow.

The paper reports the M&S board took a close look at the deal before ditching the plans and has since launched a limited service whereby shoppers can collect food orders from stores.

Publically, M&S does not have any food home delivery plans, unlike most of its supermarket rivals.

Ocado would have provided M&S with a readymade online grocery business, a field where the group has lagged behind the big supermarket chains.

Ocado is valued at £891 million but the main complication to any possible deal would be Ocado's contract to supply Waitrose goods on which this market value is based. It is thought to terminate the contract, any rival would have to pay £40m.

Last month Morrisons was rumoured to be lining up a bid for Ocado to compete with its rivals' internet-based shopping ventures but reports were largely discredited.

Ocado floated 21 July this year, but shares have never risen above the float price of 170p.

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