Warrant Wire
Amazon Just Did It Again. This Time the Supplier Is 3M.
At a glance
3M expanded its commercial relationship with Amazon on October 19 and issued an Amazon subsidiary a warrant for up to 3,162,015 shares, less than 1 percent of the company, at $164.89 per share, just above the prior day’s close, over seven years. Eighty-five percent vests as Amazon pays for optical connectivity and other data center products, in full at $6 billion of cumulative payments; the rest vests on event-based milestones. 3M shares rose about 5 percent.
Wrnt’s perspective
A 124-year-old industrial with about $25 billion of revenue just used a growth company’s playbook. 3M expanded its data center supply relationship with Amazon and attached a warrant that vests as Amazon pays, and is worth something to Amazon only if 3M’s stock is higher than the day it was signed. A discount pays for volume on every unit, whether or not the growth story plays out. This pays only as the money comes in, and only once 3M’s existing holders are already ahead.
Each side walked away with something a purchase order can’t deliver. 3M has a second named hyperscaler buying its data center optics, after Microsoft in July, and the visibility to build capacity against it. Amazon has a supplier with seven years of reasons to put its orders first, and a share of the value its own buying creates.
The tradeoff. Behind the deal sit years of measurement, vesting against payments, oversight and disclosure. 3M has a team for it. Most issuers and holders don’t, which is where the idea usually dies, and the work Wrnt was built to run.
Generac, Qualcomm, now 3M, all since September. Critical supply, a customer whose orders decide the supplier’s growth story, equity that vests on purchases. The same structure runs through thousands of real warrant documents: bank and fintech, enterprise and supplier, growth company and anchor customer. It’s the pattern in The Upside Left on the Table, and this is the next line in the exhibit.