Ocado Group PLC - Statement regarding acquisitions
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE REGULATION (EU) NO 596/2014
For immediate release
Ocado Group plc
OCADO ACQUIRES KINDRED SYSTEMS AND HADDINGTON DYNAMICS TO ENHANCE ITS ROBOTIC MANIPULATION CAPABILITIES AND ACCELERATE THE COMMERCIAL DELIVERY OF ROBOTIC PICKING FOR ITS OSP CLIENTS.
Ocado Group plc ("Ocado"), the leading online grocery platform and solutions provider, today announces the proposed acquisition of:
· Kindred Systems Inc. ("Kindred Systems") an advanced piece-picking robotics company for consideration of approximately
· Haddington Dynamics Inc. ("Haddington Dynamics") a robotic-arm designer and manufacturer for consideration of approximately
"We consider the opportunities for robotic manipulation solutions to be significant, both for Ocado Smart Platform clients and across the fast-growing online retail and logistics sectors. Ocado has made meaningful progress in developing the machine learning, computer vision and engineering systems required for the robotic picking solutions that are currently in production at our Customer Fulfilment Centre ("CFC") in Erith. Given the market opportunity we want to accelerate the development of our systems, including improving their speed, accuracy, product range and economics.
I am delighted to be welcoming Kindred Systems and Haddington Dynamics to the Ocado group, as we believe they have the capabilities to allow us to accelerate delivery, innovate more, and grow faster. I am also excited by the opportunity to enter new markets for robotic solutions outside of grocery that is demonstrated by Kindred Systems' robust growth, with existing customers such as Gap and American Eagle across the general merchandise and logistics sectors."
"I am proud to see Kindred Systems and our brilliant team recognised by Ocado as a leader in robotic pick and place manipulation, and we are extremely excited to realise our next chapter as part of them. We have achieved very strong growth with our retail e-commerce fulfilment customers over the last 3 years, and the unique challenges presented in grocery fulfilment will bring an even richer learning environment, further expanding on both our technology and market solutions set. Benefitting from Ocado's excellence in research, technology, product development and partnering will give Kindred Systems the opportunity to continue to grow and stay at the forefront of AI and machine learning automation and workforce collaboration."
"Our unique approach to highly dextrous robotic arms will provide meaningful benefits to delivering robotic manipulation in complex use cases like grocery. We look forward to joining the team."
The Kindred Systems and Haddington Dynamics businesses
Kindred Systems is a robotic solutions company based in
Founded in 2014, Kindred Systems was one of the first companies to successfully use deep reinforcement learning (a form of artificial intelligence that improves the learning process of handling disparate items like those in grocery) to develop piece-picking robots with AI-powered vision and motion control. Once a robot is installed, Kindred Systems provides teleoperation remote assistance and engineering services to ensure that the robot continues to operate at a high pick rate with limited downtime.
Kindred Systems has around 90 employees, approximately half of whom are engineers who will join Ocado's existing technology team, with the remainder of employees continuing to drive Kindred Systems' growth. Kindred Systems is expected to have approximately 180 robots installed and operating by the end of 2020 across its growing client base, and is expected to generate revenues of over
Haddington Dynamics is an advanced research and development company based in
When combined with Ocado's existing expertise and technologies in robotic manipulation, Kindred Systems and Haddington Dynamics are expected to accelerate the commercialisation of robotic picking and other automation tasks for OSP clients. The solution for grocery picking will fit seamlessly into our current CFC and Micro Fulfilment Centre ("MFC") footprints and will be fully-integrated into OSP. Given the significant costs associated with the decant and picking functions within CFCs - up to
Kindred Systems' existing customers are focused on robotic picking within the general merchandise and logistics sectors, and represent a large and fast-growing new segment for Ocado Solutions. Ocado will support Kindred Systems' existing sales and product development capabilities in order to expand its customer base and robot deployment within both the
Expected financial impact for Ocado
The transaction will have no financial impact in the current financial year. Ocado expects full year 2021 revenues to increase as a result of the two acquisitions by approximately
Additional information on the Kindred Systems and Haddington Dynamics acquisitions
The acquisition of Kindred Systems constitutes a Class 2 transaction for Ocado under the UK Financial Conduct Authority's Listing Rules.
Ocado has entered into definitive transaction documents in connection with the acquisition of the entire issued share capital of Kindred Systems, which will be effected pursuant to a plan of arrangement under the laws of
The acquisition consideration of approximately
Kindred Systems generated revenues of
Ocado is excited to be welcoming all Kindred Systems and Haddington Dynamics employees to the group who will continue to deliver on the exciting opportunities that their technology presents. Ocado has identified
The completion of the Haddington Dynamics acquisition is subject to the satisfaction of certain US regulatory and commercial closing conditions, and is expected to close during calendar year 2020.
Composition of the acquisition consideration of approximately
Investor and Analyst Q&A Call
A Q&A call will be hosted by
Dial in details are: +44 33 0606 1122, room number: 430685, participant pin: 6945.
A replay facility can be accessed on: +44 33 0606 1122, room number: 473442 for 90 days following the announcement.
The person responsible for arranging the release of this announcement is:
Group General Counsel and Company Secretary
Ocado Group plc
Buildings One & Two
Tel: +44 (0)1707 228 000
Certain statements contained in this announcement constitute "forward-looking statements" with respect to the financial condition, performance, strategic initiatives, objectives, results of operations and business of the Ocado group. All statements other than statements of historical facts included in this announcement are, or may be deemed to be, forward-looking statements. Without limitation, any statements preceded or followed by or that include the words ''targets'', ''plans'', ''believes'', ''expects'', ''aims'', ''intends'', ''anticipates'', ''estimates'', ''projects'', ''will'', ''may'', "would", "could" or "should", or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; and (ii) business and management strategies and the expansion and growth of the Ocado group's operations. Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results, performance or achievements to differ materially from those projected or implied in any forward-looking statements. The important factors that could cause the Ocado group's actual results, performance or achievements to differ materially from those in the forward looking statements include, among others, economic and business cycles, the terms and conditions of the Ocado group's financing arrangements, foreign currency rate fluctuations, competition in the Ocado group's principal markets, acquisitions or disposals of businesses or assets and trends in the Ocado group's principal industries. Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur. The forward-looking statements contained in this announcement speak only as of the date of this announcement. The Ocado group and its directors, and any person acting on its or their behalf each expressly disclaim any obligation or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law or regulation.
This announcement is not an offer to sell, or a solicitation of an offer to purchase, any securities. The securities referenced above will be issued in private transactions pursuant to an exemption from the registration requirements of the US Securities Act of 1933 and may only be offered or sold pursuant to an exemption from, or in a transaction not subject to, such registration requirements.
 Represents 100% of total labour cost associated with picking, packing and decanting processes at a typical six module CFC, with
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