- Shopify recently announced that it is acquiring 6 River Systems for $450 million. These are the details behind the deal.
Leading multi-channel commerce platform Shopify has announced that it reached an agreement to buy 6 River Systems — which is a leading provider of collaborative warehouse fulfillment solutions. In June, Shopify introduced a trusted fulfillment network that will ensure timely deliveries, lower shipping costs, and provide superb customer experience for merchants and their customers called Shopify Fulfillment Network.
Based in Ottawa, Canada, Shopify is used by 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. And the platform also provides merchants with a powerful back-office and a single view of their business ranging from payments to shipping. Currently, Shopify powers more than 800,000 businesses in approximately 175 countries. Some of the brands that use Shopify include Unilever, Kylie Cosmetics, Allbirds, and MVMT.
This acquisition is a critical step for Shopify to accelerate its growth. And 6 River Systems will also continue to build and sell their solution for warehouses.
By acquiring 6 River Systems, Shopify will be adding a team with decades of experience in fulfillment software and robotics including experienced leaders from Kiva Systems (now Amazon Robotics). 6 River Systems’ cloud-based software and collaborative mobile robots called “Chuck” are being added to the Shopify Fulfillment Network and will increase the speed and reliability of warehouse operations by empowering on-site 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 Shopify CEO Tobi Lütke in a statement. “With 6 River Systems, we will bring technology and operational efficiencies to companies of all sizes around the world.”
As part of the agreement — which has been approved by 6 River Systems’ stockholders — Shopify is going to acquire all of 6 River Systems’ outstanding securities in a transaction valued at approximately $450 million, consisting of about 60% in cash and 40% in Shopify Class A Subordinate Voting Shares. And 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 be treated as stock-based compensation. The deal is expected to close in Q4 2019 subject to closing conditions.
“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,” added 6 River Systems co-CEO and co-founder Jerome Dubois.
Dubois had founded 6 River Systems in Waltham, Massachusetts in 2015 with co-CEO Rylan Hamilton and CTO Christopher Cacioppo. Dubois and Hamilton were both previously executives at Kiva Systems. 6 River’s solutions are operating in more than 20 facilities in the U.S., Canada and Europe and it fulfills millions of units each week for companies including Lockheed Martin, CSAT Solutions, ACT Fulfillment, DHL, XPO Logistics, and Office Depot.
This transaction is not expected to have a material impact on Shopify’s revenue in 2019. And 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.
