Shopify buying 6 River Systems

by The Canadian Press (CPSTF)

OTTAWA – Shopify Inc. says it will buy fulfillment solutions company 6 River Systems Inc. in a US$450 million cash and share deal as it looks to push further into the warehousing and shipping side of online retail.

Ottawa-based Shopify says the acquisition will give it access to fulfillment software and robotics, including mobile robots designed to get orders shipped more efficiently from warehouses.

6 River Systems will continue to build and sell their solution for warehouses, which is already in more than 20 facilities in North America and Europe, fulfilling millions of units each week for companies such as Lockheed Martin, DHL, and Office Depot.

Shopify announced in June that it would spend over US$1 billion in the next few years to establish a network of U.S. fulfillment centres, providing its merchants with an alternative to online giant Amazon in the warehousing and shipping sector.

The company says it will pay 60 percent in cash and 40 percent in Shopify class A subordinate voting shares for the company, including $69 million in shares and options that will vest to 6 River Systems founders and employees based on certain conditions.

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.

Tobi Lutke, CEO of Shopify, says in a release that the 6 River System deal gives it access to advanced technology that will bring efficiencies to companies of all sizes.

Shopify, which says it has 820,000 merchants as customers, is a technology platform that helps retailers sell merchandise online.