Walmart Backed Supply Chain Company Symbotic Gets SPAC Deal: What Investors Should Know

An artificial intelligence-enabled platform for the supply chain is going public in a SPAC deal announced Monday morning.

The SPAC Deal: Symbotic announced a SPAC Deal with SVF Investment Corp 3 SVFC, a SPAC from Softbank Group SFTBY.

The deal values Symbotic at a pro forma equity value of $5.5 billion. Existing investor Walmart Inc WMT is part of the PIPE (private investment in public equity) for the SPAC deal.

Public SVFC shareholders will own 6% of the company after the merger. Walmart Inc will own 9% of the new company. The deal is expected to close in the first half of 2022. The new company will trade as Symbotic Inc with the ticker SYM on the Nasdaq.

About Symbotic: Technology platform Symbotic was built to transform the traditional warehouse with autonomous robots and artificial intelligence enabled software.

“When we founded Symbotic, we set out to develop technology to make the supply chain work better for everyone,” Symbotic CEO Rick Cohen said. “We have successfully invested and developed a truly disruptive solution that reimagines the traditional warehouse from the ground up.”

Symbotic operates systems in over 1,400 stores in 16 states and 8 Canadian provinces.

The company’s autonomous mobile robots called Symbots move at speeds of up to 25 mph and have 99.99% accuracy.

Using Symbotic can help with reduction in damage and waste due to inventory management that is more efficient according to the company.

Related Link: December SPAC Merger Calendar: Upcoming Votes, Stocks To Watch

Growth Ahead: The global supply chain is a $1 trillion market opportunity, according to Symbotic.

Symbotic counts some of the largest grocery companies as customers and has a contracted order backlog of over $5 billion, the largest in the industry.

C&S Wholesale Grocers, which is the largest U.S. wholesale grocery distributor, is a partner with the company. Albertsons Companies ACI, which is the third-largest supermarket in the world, is a partner. Investor Walmart is also a partner with the company.

Walmart began an initial agreement with Symbotic back in 2015, and it has grown over time.

Proceeds from the transaction are expected to help the company with its growth plan and delivering on its contracted backlog.

“This includes expansion into new verticals such as auto parts, home improvement and apparel as well as entering new geographies,” the company said.

Other growth initiatives include increasing penetration from existing customers and winning new customers in the grocery sector.

Financials: Symbotic had revenue of $92 million in fiscal 2020. The company is guiding for revenue to hit $211 million in fiscal 2021, $433 million in fiscal 2022 and $2 billion in fiscal 2025.

The company sees revenue growing at a compounded annual growth rate of 86% from fiscal 2020 to fiscal 2025.

Symbotic is targeting 25% EBITDA gross margins, which will increase as the company scales.

Price Action: SVFC shares are up 1% to $9.97 on Monday.