Amazon Gets Warrant for 1.69M Generac Shares in $8B Deal

Generac Holdings told the U.S. Securities and Exchange Commission on 16 September that it had signed a long-term agreement to supply backup power generators for Amazon's data centres — and that it had handed Amazon a claim on its own stock as part of the bargain. In a Form 8-K, the Wisconsin generator maker said it issued Amazon.com NV Investment Holdings LLC, a wholly owned Amazon subsidiary, a warrant to acquire up to 1,693,745 Generac shares at an exercise price of $200.9266 each. That is roughly $340 million of stock at the strike price. The warrant runs through 16 September 2033.

The vesting schedule is what ties the two halves of the deal together. Generac said 307,954 warrant shares vested on the date of issuance, and that the remainder vest "over the term of the Warrant in multiple tranches contingent upon aggregate gross payments, net of certain offsets" rising to $8 billion. Initial deliveries of backup generators are expected to total $2.4 billion in 2027 and 2028, according to the filing. The $8 billion figure is the ceiling that unlocks the full warrant, not a committed purchase order: beyond the 2027-28 number, Generac disclosed no site count, generator models or firm volumes.

Amazon has been structuring supplier deals this way repeatedly. CNBC reported that a week earlier Amazon agreed to use Qualcomm's custom artificial-intelligence chips and received warrants to acquire as much as $4 billion of Qualcomm stock, and that it already holds warrants or stakes in Astera Labs, air-cargo contractor ATSG, Plug Power and grocery distributor SpartanNash. The pattern matters because power, not chips alone, has become the binding constraint on AI data-centre construction — and the companies that build generators are suddenly negotiating from strength.

The market reaction is large but still unsettled. Generac closed at $175.11 on 16 September, before the disclosure. CNBC, publishing at 5:02 p.m. Eastern that day, said shares had soared more than 40% in extended trading. On 17 September the stock opened at $229.50 and reached an intraday high of $231.89 before giving back part of the move, trading at $211.45 at 12:11 p.m. Eastern — about 20.7% above the previous close, according to Yahoo Finance data. US markets were still open at that point, so there is no settled close for 17 September yet.

One number frames the economics for Amazon: the $200.9266 strike sits roughly 14.7% above Generac's 16 September close, a premium the shares cleared within a single session. CNBC put the warrant at almost 3% of Generac's outstanding shares, against a market capitalisation of about $10.3 billion as of Wednesday's close. The filing adds that the exercise price and share count are subject to anti-dilution adjustments and that Generac granted registration rights on the warrant shares. What is still unknown: how many Amazon sites the generators will serve, and whether payments ever approach the $8 billion threshold that would vest the warrant in full.

This article is for information only and is not investment advice.