Ocado acquires Kindred Systems and Haddington Dynamics

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British online grocery technology company Ocado Group has announced the acquisition of two US-based robotics firms as it looks to enter new markets.

Ocado has agreed in principle to purchase Kindred Systems, a piece-picking robotics developer based in San Francisco and Toronto, for approximately US$262m (£203m), and Haddington Dynamics, a robotic-arm designer and manufacturer based in Las Vegas, for approximately US$25m (£19m), subject to closing adjustments.

Both acquisitions are expected to enhance Ocado’s robotic manipulation capabilities and accelerate the commercialisation of robotic picking and other automation tasks for Ocado Smart Platform (OSP) clients, as well as across the online retail and logistics sectors.

The announcement follows last month’s news that Ocado had acquired a minority stake in Myrmex, a Greek materials handling robotics start-up.

According to Ocado, the new automation solutions developed will reduce the costs associated with current decant and picking functions within Ocado Customer Fulfilment Centres (CFC) by up to £7m of annual cost per CFC.

Tim Steiner, CEO of Ocado, said the company had 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 Ocado’s 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,” said Steiner. “I am delighted to be welcoming Kindred Systems and Haddington Dynamics to Ocado Group, as we believe they have the capabilities to allow us to accelerate delivery, innovate more, and grow faster.”

A new, combined grocery-picking solution will fit into Ocado’s current CFC and Micro Fulfilment Centre footprints and will be fully-integrated into its OSP. Further uses within CFCs, such as de-palletising and de-trashing, and in other applications, such as food handling and vertical farming, may also be possible over the medium-term.

Steiner added that he was excited by the opportunity for Ocado to enter new markets for robotic solutions outside of grocery, as demonstrated by Kindred Systems’ growth, with existing customers such as Gap and American Eagle across the general merchandise and logistics sectors.

Ocado said it will support Kindred Systems’ existing sales and product development capabilities in order to expand its customer base and robot deployment within both the USA and globally as part of a structural shift towards e-commerce.

Founded in 2014, Kindred Systems has around 90 employees, approximately half of whom are engineers who will join Ocado’s existing technology team. The company is expected to have approximately 180 piece-picking robots with AI-powered vision and motion control installed and operating by the end of 2020 across its client base, and is expected to generate revenues of over US$35m (27m) in 2021.

Haddington Dynamics’ technology allows for robotic arms to be manufactured at a relatively low cost via 3D printing. Current clients include NASA and DuPont.

Ocado said it expects 2021 revenues to increase as a result of the two acquisitions by approximately £30m.

In September, Norwegian robotics company AutoStore announced that it had filed patent infringement lawsuits in the USA and UK against Ocado Group.

The automated storage and retrieval systems developer is seeking court orders barring Ocado and its partner, Tharsus Group, from manufacturing, importing, using and selling technology that allegedly infringes AutoStore’s patents, as well as monetary damages.

Ocado responded by saying it had not been notified about the legal action and indicated it would fight any such claims.

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