* Could not see attractive return from Kiva buy-source
* Wal-Mart not Kiva client, making deal harder to justify
* Tried to buy Quidsi before Amazon bought it-source
By Alistair Barr
SAN FRANCISCO, March 22 Wal-Mart Stores Inc
was offered the chance to bid for warehouse robot
developer Kiva Systems, but passed on the deal because it did
not see an attractive return on the investment, a source
familiar with the situation said.
The world's largest retailer is also not a customer of Kiva,
which Amazon.com agreed to buy this week for $775
million, making it more difficult to justify an acquisition, the
George Boutros, a partner at Frank Quattrone's Qatalyst
Partners investment bank, advised Kiva, another source familiar
with the situation said.
The sources did not want to be identified because they are
not authorized to speak publicly about such matters.
Wal-Mart is investing a lot in its e-commerce business to
try to catch up with Amazon, the world's largest Internet
retailer. This means the companies sometimes vie for acquisition
opportunities in the sector.
When Quidsi, the company behind Diapers.com, was up for sale
in 2010, Wal-Mart pursued an acquisition, according to another
source familiar with that situation. However, Quidsi entered
exclusive negotiations with Amazon and ended up agreeing to sell
to them in late 2010 for more than $500 million, the source
Wal-Mart may have been less interested in Kiva because most
of the retail giant's warehouses are not designed for
e-commerce, according to Scot Wingo of ChannelAdvisor, which
helps merchants sell more online.
"I can see how Wal-Mart would not have valued Kiva as much
as Amazon," Wingo said.
Wal-Mart's warehouses are mostly designed to take in
products in bulk and ship them out in bulk to the company's
stores. In contrast, Amazon has to take products into its
warehouses in bulk and then pick out individual items and ship
them to people's homes or offices, Wingo explained.
Kiva's technology helps with these more-complicated
e-commerce shipping tasks. For instance, Kiva robots and
software re-organize warehouses over time, bringing higher
turnover products closer to human pickers and packers, Wingo
"Some on Wall Street are scratching their heads about the
Amazon purchase, but many people don't get the complexity of
making e-commerce fulfillment centers work," Wingo added. "If
you're Amazon, spending so much on all these warehouses, the
deal makes sense."
A Wal-Mart spokesman said Wal-Mart partners with a variety
of companies for distribution center technology. He also said
the company does not work with Kiva and did not pursue buying
Wal-Mart declined to comment on whether it was offered the
chance to buy Kiva and did not respond to a request for comment
about its interest in Quidsi.
An Amazon spokeswoman said Kiva's material handling
technology improves productivity by bringing the products
directly to employees to pick, pack and stow, helping fulfill
customer orders faster. "We share their passion for invention
and want to support their continued growth." She declined to