FedEx Corp. has agreed to purchase $200 million in warehouse robotics products and services from Berkshire Grey in exchange for warrants representing 25 million shares of Berkshire Grey stock.
The stock warrants will vest incrementally for FedEx (NYSE: FDX) and be fully vested upon completion of the robotics contract, which is slated to conclude by 2025. Berkshire Grey (NASDAQ: BGY) was trading up 34% at $2.39 per share early Tuesday afternoon. At current prices, FedEx’s options would be worth approximately $60 million.
The companies did not disclose the exercise price of the stock warrants.
“Our growing relationship with Berkshire Grey for robotic automation is a direct response to the growth of e-commerce, which has accelerated the demand for reliable automated solutions throughout all stages of the supply chain,” said Rebecca Yeung, corporate vice president of operations science and advanced technology for FedEx. “FedEx believes that continued innovation and automation will improve efficiency, productivity and safety for its team members as they continue to keep the global supply chain moving.”
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FedEx first deployed Berkshire Grey robotics in its Queens, New York, facility in August 2021. Plans at the time called for additional robotics solutions in sortation facilities in Las Vegas and Columbus, Ohio.
Berkshire Grey’s AI-enabled Robotic Product Sortation and Identification (RPSi) system is designed to autonomously process, pick, identify, sort, collect and containerize individual polybags, tubes, padded mailers and other small packages. The company describes itself as an “intelligent enterprise robotics” (IER) company. Its technology is designed to “learn” about processes in warehouse operations, allowing them to continually improve efficiency while reducing manual labor, which can then be redeployed in more high-value tasks.
“Berkshire Grey and FedEx are strategically aligned,” said Tom Wagner, CEO of Berkshire Grey. “These new agreements reflect our mutual commitment to innovations in robotic automation that can remove barriers within the supply chain, ease the physical burden on employees and streamline operations. We look forward to working together on this new program and to advancing other automation programs with FedEx moving forward.”
FedEx Ground plans to have RPSi systems in place at select additional facilities in the network over the next 12 months.
The new agreement on Tuesday expands that relationship and will include joint development of additional AI-based robotic capabilities. The two companies also expect to execute a master system purchase agreement in 2022, which will streamline and expedite the procurement process for Berkshire Grey solutions across all FedEx operating companies globally.