Japanese multinational investment holding firm SoftBank Group Corp. and American robotics warehouse automation company Symbotic Inc., have on Monday announced the establishment of GreenBox Systems LLC (GreenBox), a new joint venture to address the more than $500 billion annual warehouse-as-a-service market opportunity.

Concurrently, Symbotic also announced an approximately $7.5 billion new customer contract with GreenBox, who will be the exclusive provider of Symbotic systems in the warehouse-as-a-service market, and will make supply chain services available to customers.

SoftBank said in a statement on Monday that SoftBank and Symbotic will own 65 percent and 35 percent of GreenBox, respectively.

GreenBox will initially be funded with $100 million of capital contributed pro rata by Symbotic and SoftBank to fund operating expenses and initial system purchases.

After Symbotic’s initial $35 million pro rata capital contribution, the contract is expected to be accretive to Symbotic’s annual free cash flow (net of capital contributions).

According to the statement, GreenBox will automate supply chain networks globally by operating and making accessible Symbotic’s advanced artificial intellingece (A.I.) and automation technology for the warehouse.

Symbotic’s A.I.-powered robotics and software technology will be the cornerstone of GreenBox, installed in single and multi-tenant facilities.

The efficiency, SKU agility, scalability, and density of the Symbotic system allows GreenBox to effectively manage single and multi-tenant facilities across the supply chain and thus fundamentally reshape the economics of automated supply chain services.

Enabled by these technologies, GreenBox customers will be able to reduce inventory and costs while boosting SKU count and agility, all without associated capital expenditures and operational complexity.

“We are pleased to partner with SoftBank in this venture that accelerates our shared vision to transform the supply chain,” said Rick Cohen, Symbotic’s Chairman and Chief Executive Officer.

According to him, GreenBox enables Symbotic to bring the benefits of our technology to a broader customer universe, expanding our market opportunity.

Vikas J. Parekh, Managing Partner at SoftBank Investment Advisers, said that GreenBox taps into the powerful potential of A.I. and other enabling technologies in supply chains, while also making the benefits of automation accessible to more businesses through an ‘as-a-service’ offering.

“In partnership with Symbotic, GreenBox will equip customers with more intelligent, streamlined, and scalable warehousing solutions while eliminating the burden of major capital expenditures,” he added.

According to the statement, GreenBox will order Symbotic’s systems over a six-year period commencing in fiscal year 2024, to be implemented across its warehouse network in larger-scale deployments than Symbotic’s current installed base systems.

Symbotic expects in excess of $500 million in annual recurring software, parts and services revenue from GreenBox once all systems are operational.

Symbotic systems typically become fully operational within 24 months of project design approval.

Meanwhile, GreenBox’s board of managers will comprise three managers, one nominee from each of Symbotic and SoftBank, and one independent manager. GreenBox’s management team will be independent from Symbotic and SoftBank.

Under the joint venture, Symbotic has issued warrants to SoftBank representing up to 2 percent of Symbotic’s fully diluted shares outstanding, which will vest in 0.25 percent increments upon payment of each $937.5 million to Symbotic for installation of Symbotic systems under the GreenBox contract.

The warrants have a six-year term and strike price representing Symbotic’s 45 trading day volume weighted average price (VWAP) as of July 21, 2023, of $41.972 per share.

Separately, SoftBank has purchased approximately 17.8 million shares from Symbotic Chairman and Chief Executive Officer Rick Cohen, at Symbotic’s 45 calendar day VWAP as of May 26, 2023, of $28.05 per share.

This sale is 100 percent secondary shares and will not result in any dilution to Symbotic shareholders.

SoftBank is a firm invests in breakthrough technology. It is comprised of SoftBank Group Corp, an investment holding company that includes stakes in AI, smart robotics, internet of things (IoT), telecommunications, internet services, and clean energy technology providers; the SoftBank Vision Funds and SoftBank Latin America Funds, which are investing more than $160 billion to help extraordinary entrepreneurs transform industries and shape new ones.

Symbotic is an automation technology firm reimagining the supply chain with its end-to-end, A.I.-powered robotic and software platform.

The firm reinvents the warehouse as a strategic asset for the retail, wholesale, and food and beverage companies.

Applying next-generation technology, high-density storage and machine learning to solve today’s complex distribution challenges, Symbotic enables companies to move goods with unmatched speed, agility, accuracy and efficiency.

As the backbone of commerce, Symbotic transforms the flow of goods and the economics of the supply chain for its customers.

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