Amazon is apparently forcing suppliers for a discounted stake in their businesses

Amazon is said to have arranged hundreds of deals with suppliers to buy stakes in their businesses at reduced prices. According to The Wall Street Journal, it has acquired warrants for at least a dozen publicly traded companies and more than 75 private companies. Amazon’s investments in those organizations, both current and potential, are worth billions of dollars.

Warrants function similarly to stock options. Holders of warrants can purchase shares at a preset price for a set duration. If the share price climbs during that time, the warrant holder can swoop in and purchase a stake in the company at a below-market price.

Amazon is claimed to have warrant deals with companies such as Kohl’s, aircraft leasing companies, call center firms, and hydrogen fuel cell suppliers, among others. According to the study, some of the transactions have made Amazon one of the top shareholders in the respective companies. In a number of cases, the eCommerce giant has the right to board seats as well as the potential to outbid any acquisition offers.

Some business leaders stated that they couldn’t turn down Amazon’s proposals or risk missing a huge contract with a competitor. Others saw Amazon’s demands as the price of doing business.

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