Amazon in Pact for Potential Stake in Sensor Maker Velodyne

(Bloomberg) — Velodyne Lidar Inc. shares more than doubled in late trading after Amazon.com Inc. acquired warrants that could lead to a stake in the auto-sensor maker.

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Velodyne agreed to issue to Amazon a warrant to acquire more than 39 million shares or almost 16% of the company, according to a filing; the warrant shares will vest over time as Amazon makes payments to Velodyne.

It’s the latest example of Amazon seeking to invest in its business partners in order to benefit from upside associated with the relationship. Amazon in March invested $131 million for a minority stake of air cargo operator Air Transport Services Group Inc. On Thursday, Amazon announced its 2019 investment in electric automaker Rivian Automotive Inc. contributed an $11.8 billion net income gain in the quarter ended Dec. 31. Rivian had its initial public offering in November.

Velodyne is one of several startups that have gone public in the past two years by merging with so-called blank check companies, known as special purpose acquisition companies, or SPACs. Months after that transaction, investor Ford Motor Co. disclosed that it had sold off its stake in Velodyne, though it was still using the company’s technology. Through the close of regular trading Monday, the stock had slumped 84% over the past year as the frenzy over SPACs has worn off.

Lidar, which stands for light detection and ranging, is a key technology as many of the the world’s leading automakers, tech companies and startups race to make fully autonomous cars a reality. Lidar uses lasers to build a three-dimensional image of the surrounding landscape, which is critical to how the vehicle perceives the environment, predicts the behavior of pedestrians and other vehicles, and plans how to safely navigate.

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(Updates with previous Ford divestment in fourth paragraph. An earlier version corrected the potential percentage stake in second paragraph)