Shopify to acquire VC-backed 6 River Systems for US $450M

Shopify to acquire VC-backed 6 River Systems for US $450M

Shopify Inc. (NYSE/TSX: SHOP) has reached an agreement to acquire 6 River Systems, Inc. for US $450 million in a combination of cash and Shopify stock.

The acquisition is expected to close Q4 2019.

Founded in 2015 by Jerome Dubois, Rylan Hamilton and Chris Cacioppo, Waltham, Massachusetts based 6 River Systems, Inc. is a leading provider of collaborative warehouse fulfillment solutions.

With the acquisition of 6 River Systems, Shopify will add a team with decades of experience in fulfillment software and robotics, including experienced leaders from Kiva Systems (now Amazon Robotics). Shopify said 6 River Systems’ cloud-based software and collaborative mobile robots called “Chuck” will increase the speed and reliability of warehouse operations to its Fulfillment Network.

6 River Systems is backed by Menlo Ventures, Norwest Venture Partners, Eclipse Ventures and iRobot, having raised US $40 million from the backers in two rounds of financing.

Shopify Inc. (NYSE: SHOP)(TSX: SHOP), the leading multi-channel commerce platform, today announced that it has reached an agreement to acquire 6 River Systems, Inc., a leading provider of collaborative warehouse fulfillment solutions. In June, Shopify introduced the Shopify Fulfillment Network, a powerful and trusted fulfillment network that will ensure timely deliveries, lower shipping costs, and provide superb customer experience for merchants and their customers. This acquisition is a critical step to accelerate its growth, while 6 River Systems will also continue to build and sell their solution for warehouses.

With the acquisition of 6 River Systems, Shopify will add a team with decades of experience in fulfillment software and robotics, including experienced leaders from Kiva Systems (now Amazon Robotics). Adding 6 River Systems’ cloud-based software and collaborative mobile robots called “Chuck” to the Shopify Fulfillment Network will increase the speed and reliability of warehouse operations, by empowering onsite associates with daily tasks, including inventory replenishment, picking, sorting and packing.

“Shopify is taking on fulfillment the same way we’ve approached other commerce challenges, by bringing together the best technology to help everyone compete,” said Tobi Lütke, CEO of Shopify. “With 6 River Systems, we will bring technology and operational efficiencies to companies of all sizes around the
world.”

“By joining Shopify, we’re changing the game of fulfillment. Together, we will help thousands of businesses improve their fulfillment operations, with an easy-to-learn solution that can more than double productivity and improve accuracy,” said Jerome Dubois, co-CEO and co-founder of 6 River Systems.

Terms and Financial Impact

Under the terms of the agreement, which has been approved by 6 River Systems’ stockholders, Shopify will acquire all of 6 River Systems’ outstanding securities in a transaction valued at approximately USD $450 million, consisting of approximately 60% in cash and 40% in Shopify Class A Subordinate Voting Shares. Included in this amount are Shopify Class A shares and options valued at approximately $69 million that will be issued to 6 River Systems’ founders and employees that will vest subject to certain conditions and will be treated as stock-based compensation. Subject to various closing conditions, the acquisition is expected to close in the fourth quarter of 2019.

The transaction is expected to have no material impact to Shopify’s revenue in 2019. The transaction is expected to increase Shopify’s 2019 expenses by approximately $25 million, including $10 million in operating expenses; $8 million in amortization of intangibles resulting from purchase accounting; and $7 million in stock-based compensation. 6 River Systems is expected to generate annual billings of approximately $30 million in 2020, with associated revenue recognized over the multi-year lifetime of each contract.

Source: Private Capital Journal

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