Symbotic (SYM) said Thursday that it agreed to acquire Walmart's (WMT) advanced systems and robotics business for $200 million in cash at closing as part of a deal that aims to expand the retail giant's automated supply chain.

The warehouse automation firm has helped Walmart automate its supply chain since 2017. Symbotic said it is deploying its software and robotics platform across all 42 of Walmart's regional distribution centers in the US.

The retailer has selected Symbotic to develop a technology to automate its accelerated pickup and delivery, or APD, centers, previously known as market fulfillment centers. Symbotic said it will also design new systems to meet the needs of current and future customers.

Walmart has committed to buying and deploying systems for 400 APDs at stores over a multiyear period, subject to certain performance criteria being achieved. The retailer has an option to add more APDs in the coming years, Symbotic said. Walmart will pay Symbotic $520 million related to the development of an artificial intelligence-enabled robotics platform, including $230 million at closing.

Symbotic's shares were up nearly 19% in Thursday late-afternoon trade, while Walmart's were little changed.

"This is a highly strategic transaction for Symbotic as we expand upon our long-term relationship with Walmart and broaden our product offering beyond the traditional warehouse to e-commerce settings for last mile delivery," Symbotic Chief Executive Rick Cohen said.

The company expects up to $350 million in additional consideration in the future, based on the number of APD systems ordered. Symbotic expects the acquisition to close in its fiscal second quarter. The company said deal and new agreements could raise its future backlog by more than $5 billion.

"We anticipate the synergy between Symbotic's expertise and our nearly decade-long relationship in innovating the supply chain technologies to elevate customer service and rapidly advance our in-store (APD) capabilities," said Greg Cathey, Walmart's senior vice president of transformation and innovation.

Separately, Oppenheimer initiated coverage of the Symbotic stock with an outperform rating and a $35 price target.

"We see the company disrupting the warehouse and distribution center market with AI-driven automation that has the potential to reshape the fulfillment supply chain through lower-cost, higher-accuracy warehouse automation and the potential to deliver warehouse-as-a-service offerings though its GreenBox JV with SoftBank," Oppenheimer analysts, including Colin Rusch, said in a note e-mailed Thursday.