As per the terms of the agreement, which has been approved by Kiva’s stockholders, the retailer will buy all of the outstanding shares of the firm.
Amazon global customer fulfillment vice president Dave Clark, commenting on the deal said: "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."
Kiva Systems CEO and founder Mick Mountz said the company’s team has been focused, for the past ten years, on creating innovative material handling technologies.
Last year, Amazon has spent $4.6bn on warehouses, which according to Bloomberg, is the retailer’s largest operating expense at 9.5% of sales.
The latest acquisition will be the second biggest takeover by Amazon since the 2009 purchase of online retailer Zappos.com, for which the retailer spent about $1.2bn.
In 2011, the firm has acquired another e-Commerce retailer Quidsi, the firm behind Soap.com and Diapers.com, for about $545m.
Quidsi uses Kiva’s orange robots, which can slide under shelves and bins of products.
The headquarters of Kiva Systems will remain in North Reading, Massachusetts, following the takeover, which is expected to close in the second quarter of 2012.
Kiva Systems claims that its material handling technology and control software help simplify operations, reduce costs and increase flexibility for Amazon.