Amazon at Advantage; Can Buy Shares of BPO Servicing Competitors
When the merger between Capital Square Partners’ portfolio company Aegis Global and StarTek, a New York Stock Exchange listed company was announced, one of the companies at advantage was Amazon. The controlling stakes of the company was raised by 55% in the new combined US firm, giving Amazon the right to buy the stocks of its rival companies.
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Currently, Amazon Inc has a warrant that allows it to have a stake in the American BPO company that may also be providing services to Amazon’s competitors in India, such as Flipkart and Paytm.
According to reports, Amazon had earlier entered into a deal with StarTek , a Colorado based company, for an Amazon subsidiary to acquire about 4 million shares of StarTek. It was also mentioned that Amazon had made a future commitment to outsource certain back-office services from StarTek, worth about $600 million for over a period of eight years. So, these 4 million warrant shares would be vested based on Amazon payment of $600 million as and when they receive commercial services from StarTek.
This deal which made headlines, was also later disclosed in a StarTek filing with the U.S. Securities and Exchange Commission. According to this deal, Amazon subsidiary here is the NV Investment Holdings LLC, which will be issued the warrant to acquire 4 million shares of StarTek. The exercise price for StarTek shares was stated to be $9.96 per share for Amazon.
Another reason for this news to hit breaking news point was because of recent announcement by Amazon on it’s new proposed second Headquarters to come up in Denver. Many BPO industry experts have observed that this kind of a move is not new and happens quite often, that is serving competing customers. However, there are always chances for conflict of interests especially while having any kind of ownership or stake in such firms that provides services to rivals companies or customers.
Many a times, the common practice in case of such acquisitions or mergers is notifying the terms and conditions to the clients and gaining their approval, so as to stand on the same line. However, these mergers are also gainful in certain ways as they help provide better pricing possibilities and opportunities for the clients.