Warrant Wire
Amazon Didn't Just Buy Generators. It Bought Alignment.
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At a glance
Generac signed a long-term agreement to supply backup generators for Amazon's data centers, with initial deliveries of about $2.4 billion expected in 2027 and 2028. Alongside the deal, Generac issued Amazon a warrant for 1.69 million shares, roughly 3 percent of the company, at $200.93 per share. About 18 percent vested at signing; the remainder vests as Amazon's cumulative purchases climb toward $8 billion. The warrant runs through September 2033. Generac shares rose more than 40 percent on the news.
Wrnt’s perspective
Skip the headline number and read the warrant.
Only about 18 percent of it vested when the deal was signed. The rest vests in steps as Amazon's cumulative purchases work their way up toward $8 billion, and the count is net of credits, refunds and cancelled orders, so Generac isn't handing over equity for orders that get walked back. The strike is $200.93, which is roughly where the stock sat before the announcement. Amazon makes money on this only after Generac's existing shareholders already have. It runs seven years.
Look at what each side walked away with.
Generac has an anchor customer in the one end market that matters most in its industry right now, and enough visibility to build capacity against it. The dilution is real but it only costs them something if the stock is up. Amazon, for its part, now has a supplier with seven years of reasons to put Amazon's orders first, and it gets a piece of the value its own buying creates. A supply contract on its own doesn't do that. This one does because the upside is shared.
We hear a version of "well, that's Amazon" every time one of these gets announced. It isn't. We have thousands of executed warrant documents in our corpus and this structure shows up everywhere: bank and fintech, enterprise and supplier, growth company and the customer that puts it on the map.
The idea is common. Getting it done is not. Usually nobody on either side owns bringing it up, and when someone does, the work of administering the thing for seven years, vesting notices, offsets, adjustments, the tax valuation, lands on a spreadsheet and the idea dies there.