SpartanNash’s stock soars after warrant and commercial agreements with Amazon disclosed

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Shares of SpartanNash Co. soared 30% in morning trading Friday, after the distributor of grocery products to military commissaries disclosed a warrant agreement with Amazon.com Inc. , that comes with the entry into a commercial agreement with the ecommerce giant. SpartanNash issued a warrant for Amazon to buy a total of 5.44 million common shares, which would represent about 15% of the shares outstanding. BMO Capital Kelly Bania said if Amazon hits the commercial-agreement targets outlined in the warrant agreement, that would represent a more than doubling of its relationship with SpartanNash on an annual basis. “The potential deepening/expansion of its relationship with [Amazon] is a positive for [SpartanNash], especially if in PrimeNow and Fresh,” Bania wrote in a note to clients. “We estimate that like most contracts with [Amazon], margins may be lower than for independent customers. We believe that this is also a positive in adding additional diversification from [Dollar General]…although it may cause some stress in the short term.” SpartanNash’s stock has soared 55% year to date, while the S&P 500 has gained 7.4%.
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