The Zip Co Ltd (ASX: Z1P) share price is up 16% today to $4.02 after the buy-now-pay-later business announced a deal that will see it as the first payment option on the Amazon.com.au website.
Notably Zip has offered Amazon warrants or the right to buy 14.615 million Zip shares at $4.70 each which is equal to the volume weighted average price of Zip shares over the 20 days to October 31 2019. Or around 17% above the $4.02 price shares change hands for today.
The warrants may be exercised (i.e. the shares bought) at any time over the next 7 years with the first 25% of them vesting as of the agreement date. Vesting of the remainder is linked to processed volumes presumably across Amazon Australia's platform.
So we can see this is a quid pro quo deal structured to benefit both parties, with Amazon known for its hard headed approach to business.
