Symbotic Soars After Robotics Deal With Walmart - What's Going On?

Symbotic Inc. (Nasdaq: SYM) shares soared 19% following the company's announcement on January 16, 2025, that it will acquire Walmart Inc.'s (NYSE: WMT) Advanced Systems and Robotics business. This strategic move is set to significantly enhance Symbotic's product offerings and market potential.

Wilmington, Massachusetts-based Symbotic, a leader in artificial intelligence-enabled robotics technology for supply chains, announced the agreement with retail giant Walmart to acquire its Advanced Systems and Robotics business. The deal is expected to add more than $5 billion to Symbotic's future backlog and opens up a new product category for the company, targeting the burgeoning opportunity for automated fulfillment of customer orders at the local and store level.

The agreement also involves Symbotic developing and deploying an advanced solution to automate Walmart's Accelerated Pickup and Delivery centers, with an initial order covering hundreds of stores. This development is funded by Walmart and could see the deployment of systems for 400 APDs over a multi-year period, with the option for additional APDs in the future. Walmart will pay Symbotic a total of $520 million, which includes $230 million at closing.

Symbotic's acquisition is valued at $200 million in cash at close, with up to $350 million in additional contingent consideration, depending on the number of APD systems ordered. The transaction is anticipated to close in Symbotic's fiscal second quarter of 2025.

Rick Cohen, Chairman and CEO of Symbotic, expressed that the transaction is highly strategic as it expands upon the company's long-term relationship with Walmart and broadens its product offering to eCommerce settings for last-mile delivery. Walmart has been collaborating with Symbotic since 2017, deploying its software and robotics platform across all 42 of Walmart's regional distribution centers in the U.S.

The acquisition and subsequent technology deployment are expected to enable Walmart to utilize its stores more efficiently for fulfilling eCommerce orders through pickup and delivery, a service that has seen nearly 50% growth YoY, surpassing a $2.5 billion monthly run rate as of the quarter ended October 31, 2024.

Greg Cathey, Senior Vice President of Transformation and Innovation at Walmart, noted the excitement surrounding the deal, highlighting the potential to elevate customer service and rapidly advance Walmart's in-store Accelerated Pickup and Delivery capabilities.

The financial terms of the deal, including the potential for a significant increase in Symbotic's backlog and the expansion of its addressable market, have clearly resonated with investors, as reflected in the stock's sharp rise. Citi acted as the financial advisor to Symbotic for this transaction.

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