After Berkshire Grey takeover: Will Softbank become a strategic investor, or...?
The Japanese tech investor yesterday received approval to buy the remaining shares in Berkshire Grey. The remaining shares of the startup are to be acquired for $375 million and the startup is to be delisted from the stock exchange. The price of $1.40/dollar per share is 24% above the closing price on March 24 but well below previous highs. Berkshire Grey, like so many tech companies, has lost tremendous value in the wake of the stock market's performance. Softbank has been invested in Berkshire Grey since 2019, most recently with a 28.1% stake. The company had been founded in Massachusetts in 2012. Berkshire Grey considers itself a leading provider of AI-enabled robotic solutions to automate supply chain processes. Key areas of focus are picking, sorting, and moving goods. Since late January 2023, they have partnered with Locus Robotics, the leading AMR provider. Just a few days ago, Locus Robotics released a video showing a perfect interaction with a FANUC CRX cobot.
According to the latest investor presentation, Berkshire Grey last had an order backlog of $104 million. In the last reporting quarter, the loss roughly corresponded to sales - there was obviously still a lack of scaling. The aforementioned $375 million will not flow to the company, but will go to shareholders. This means that there will be little change to the previous financing level of just under $500 million.
So far, Softbank only holds sharese in a smaller amount
As far as I can see, Softbank has recently only made investments that at best gave it a say, but not control. These include United Robotics Group (through a merger with Softbank Europe - more of an embarrassment from Softbank's point of view), Jaka (the partnership with Toyota initiated by Softbank is not said to be going well), Keenon (which, like United Robotics Group, produces service robots - both compete in the USA, for example), RightHand Robotics and, of course, Agile Robots.
Reason to buy good opportunity or less transparency than desire?
We can only speculate about Softbank's motivation. On the one hand, there may well have been a good buying opportunity now - the share price was low. And Softbank was already thinking big in 2021 when both companies announced they would develop the world's most advanced automated e-commerce fulfillment provider. On the other hand, Berkshire Grey will need new money sooner or later. In the first new months of 2022, cash dropped by over $90 million to $78 million. In the current stock market situation, capital increases are difficult or lead to dilution, and alternative financing options are becoming increasingly difficult. In this respect, Softbank's intention may also have been to stabilize a shareholding and thus avoid possible write-downs of its own.
Podcast with interesting info about startups financiers
Daniel Stelter, an economist I hold in high regard, pointed out two interesting facts in the current Handelsblatt Disrupt podcast:
- Long before Silicon Valley Bank went bust, shorters had invested heavily in it. So they assumed that things would get tight. This alone shows the situation for startups, which has been tightening for months.
- Stelter sees the banking crisis as less of a problem than the upcoming write-downs on venture capital, hedge funds and others. The Handelsblatt had already reported similarly: Many startup investments have lost around 30% in value since the investor's entry.
With delisting from the stock exchange or small capital increases at old company values in the case of portfolio holdings, the existing book values can be halfway supported.
Addendum 30.03.23: This graphic could be seen on LinkedIn. Now it becomes clear: The company is likely to be miles away from planning. Now break-even is expected in Q4 2023 - however it is defined (probably without a.o.) With still available funds of 64 million at the end of 2022 and a cash outflow of 107 million in 2022, the air became quite thin. Also for Softbank.
Are we networking? LinkedIn
-> Go to the Cobot group on LinkedIn (link). The author is also a consultant (robotics, tech & finance). Hardly anyone is likely to have a comparable market overview.
