By Zaheer Kachwala and Krystal Hu
(Reuters) -SoftBank Group is forming a joint venture with warehouse automation company Symbotic to build AI-powered warehouses that will be majority owned by the Japanese technology investor, the companies said on Monday.
The firms are investing a total of $100 million in the venture, which will be called GreenBox Systems. The unit has also signed a contract to buy AI-powered systems from Symbotic that will be worth $7.5 billion in the next six years.
Symbotic went public through a merger with a SoftBank Group Corp blank-check firm last June, with investment from SoftBank in public investment in private equity (PIPE) at a valuation of $5.5 billion.
The deal will give SoftBank warrants representing about 2% of the U.S. company's outstanding shares. The Japanese firm said it had also bought 17.8 million shares of Symbotic from CEO Rick Cohen, upping its stake in the company from about 5% to 8%.
Based in Wilmington, Massachusetts, Symbotic provides robotics warehouse automation solutions and counts Walmart as its major backer and customer. The company said it has a contracted backlog of $12 billion as it helps to retrofit an existing facility to make it automated.
The JV will pursue customers who want to access the warehouse-as-a-service model to have more flexibility in multi-tenant facilities across the supply chain, according to Symbotic.
Shares of Symbotic dropped 6.2% on Monday after giving up initial gains, with a market cap of about $22 billion. SoftBank closed 1.2% higher on the Tokyo bourse before the news.
The move comes at a time when SoftBank CEO Masayoshi Son said his conglomerate plans to shift its stance to "offence mode" amid excitement over advances in artificial intelligence.
The rise of ChatGPT this year has led to a flurry of investments in all things AI, even as wider funding dries up in an uncertain economy.
The Japanese company will have a 65% stake in GreenBox, with Symbotic owning the rest.
Symbotic said it expects more than $500 million in annual recurring revenue from the sale of software, parts and services to the JV once it's operational. For fiscal year 2022, Symbotic reported revenue of $593.3 million, up 136% year over year, with a loss of $139.1 million.
(Reporting by Zaheer Kachwala and Krystal Hu; Editing by Shailesh Kuber, Anil D'Silva and Cynthia Osterman)