Amazon Weighs $600M Deal for 23% Stake in Plug Power

Amazon, already a huge player in the solar industry, has  agreed to a contract with Latham, New York-based fuel cell manufacturer Plug Power that could total $600 million and give the online retail giant a substantial stake – up to 55.3 million common shares – in the company, the Albany Times Union report on April 5.

Amazon has been given warrants to purchase more than 55 million shares of Plug Power stock at $1.18 a share, although adjustments on the exercise price would be made over the life of the deal, the local news outlet said.

Under the terms of the same agreement, Amazon will use Plug Power products and services – fuel cells and hydrogen technology – to power industrial equipment, such as forklifts, at several of its fulfillment centers.

In addition, Amazon will work with Plug Power on its new line of fuel cell engines designed for cars and trucks.

The transaction, the biggest in Plug Power’s history, would add $70 million to the company’s bottom line this year, alone. The company had earned $85.9 million in total revenue in 2016 and has never turned a profit to date, the newspaper said.

The manufacturer’s stock shot up as much as 85 percent on heavy volume to a 17-month high of $2.40 on April 5, before paring some gains to close up 73 percent, according to a report on MarketWatch. Volume soared to 134.2 million shares, enough to make the stock the most actively traded on the major U.S. exchanges, and about 22 times the full-day average. The stock was up another 8 percent in premarket trade yesterday.

“This agreement is a tremendous opportunity for Plug Power to further innovate and grow while helping to support the work Amazon does to pick, pack, and ship customer orders,” Plug Power CEO Andy Marsh said in a statement. ”

Plug Power said it started talks with Amazon a year ago and actually shipped GenDrive fuel cells to Amazon warehouse sites last fall.

According to the Times Union report, BlackRock was the single largest Plug Power shareholder, with 9 million shares (a 5 percent stake) as of last April.  However, Amazon could obtain a 23 percent stake if it exercises all of the warrants it can obtain.

That means that Amazon could become Plug Power’s largest shareholder sometime this year, although the company is currently in the process of selling an additional $75 million in stock.

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