Amazon To Buy Kiva Systems In $775M Deal

Amazon.com Inc. (NASDAQ: AMZN) will buy robotics company Kiva Systems Inc. for $775 million as part of its efforts to boost efficiency.

The deal is expected to close in the second quarter, the online retailer said Tuesday.

Kiva has provided robots to move goods around shipping centers for such companies as Crate & Barrel, Gap Inc., and Diapers.com., which Amazon acquired last year through its $545 million purchase of Quidsi Inc. The robots lift shelving from underneath and scurry them within warehouses to speed the packaging and shipping process.

The North Reading, Mass., company will continue to serve existing customers after the acquisition, an Amazon spokeswoman told MarketWatch.

Amazon has long used automation in its fulfillment centers, and Kiva's technology is another way to improve productivity by bringing the products directly to employees to pick, pack and stow, said Dave Clark, Amazon's vice president of global customer fulfillment, in a statement.

The Seattle company has reported declining profits as it continues to buy facilities such as data centers and fulfillment centers. It saw a 57 percent drop in fourth-quarter profits in January as a result.

The acquisition of Kiva is Amazon's second largest, after the 2009 purchase of online clothing retailer Zappos.com, for about $1.2 billion. The purchase of the robotics company's trademark orange machines is just another step in the online retailer's efforts to expand.

It's an internal infrastructure play, and it comes at a time when their headcount has been growing faster than revenue, said Colin Gillis, an analyst at BGC Partners LP in New York, according to Bloomberg. One of the knocks on Amazon is that their fulfillment is an expensive, manual process. They're not getting the benefits of scale. So they're taking some steps towards it.

Amazon.com shares rose $7.58, or 4 percent, to $193.10 at midday.