Jabil Stock Jumps After Issuing Amazon a Warrant for $160 Million of Shares

https://www.barrons.com/amp/articles/jabil-stock-price-amazon-warrants-cf737f84

Jabil stock rose Friday after the company granted warrants to Amazon . com that entitle it to buy more than one million shares for about $160 million.

Jabil stock was up 3.9% to $148.46 on the news, while Amazon.com shares had gained 1.8% to $224.18.

Contract manufacturer Jabil issued Amazon a warrant to buy 1,158, 539 Jabil shares at an initial exercise price of $137.7671, according to a form it filed with the Securities and Exchange Commission. For the fiscal first quarter ended Nov. 30, 2024, Jabil had a weighted average shares outstanding of 114 million on a diluted basis, so if exercised fully, the warrant represents about 1% of share dilution.

Jabil and Amazon already have a business relationship, as their respective subsidiaries, Jabil Procurement and Supply Chain Services and Amazon Business, deliver procurement solutions together. The warrants are subject to vesting for payments for purchased products and services over the warrant term, which expires Dec. 27, 2031. A portion of the warrants have vested with the issuance.

“Essentially, it’s an agreement that incentivizes both parties to deepen the relationship,” Jabil said in an email. “If they meet agreed upon financial conditions, they can execute the warrants.” The warrants allow for cash or cashless exercises.

As of Sept. 30, Amazon didn’t own any Jabil stock.

The signatory on Jabil’s side was Matthew Crowley, executive vice president, Intelligent Infrastructure Segment, and a former Amazon Web Services executive.