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Shopify to buy warehouse automation company for USD 450mn
Posted on Tuesday, 10 September 2019 11:11
Shopify has signed on the dotted line to acquire 6 River Systems, a warehouse automation fulfillment service provider, for USD 450.00 million, consisting of 60.0 per cent cash and 40.0 per cent class A subordinate voting shares.
The deal adds a collaborative robotic fleet to its existing network, which was established in June to ensure timely deliveries, lower shipping costs and better customer experiences.
Under the terms of the transaction, the share part of the agreement includes class A common stock and options valued at around USD 69.00 million to be issued to founders and employees and treated as scrip-based compensation.
Shopify said the acquisition is a critical step to accelerate growth, while continuing to build and sell 6 River Systems for warehouses.
The company will add a team with decades of experience in fulfillment software and robotics, including leaders from Kiva Systems, which is now known as Amazon Robotics.
It is expected to increase the speed and reliability of warehouse operations by empowering onsite daily tasks, including inventory replenishment, picking, sorting and packing.
6 River Systems is not likely to impact Shopify’s revenue in 2019 but will increase expenses by USD 25.00 million, including USD 10.00 million in operating expenses, USD 8.00 million in amortisation of intangibles resulting from purchase accounting and USD 7.00 million in stock-based compensation.
The target is expected to generate annual billings of about USD 30.00 million in 2020.
Shares in Shopify closed down 5.7 per cent to USD 358.67 yesterday, giving the group a market capitalisation of USD 35.97 billion.
The company is a multi-channel commerce platform that allows merchants to design, set up and manage their stores across multiple sales channels, including mobile, web, social media, marketplaces, brick and mortar locations and pop-up shops.
Shopify generated revenue of USD 682.46 million in the six months ended 30th June 2019, up 48.6 per cent from USD 459.30 million in the corresponding period of 2018.
Net loss totalled USD 52.83 million in H1 2019, compared to a loss of USD 39.86 million in H1 2018.
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