3M Shares Jump After Hours on Expanded Amazon Data Centre Deal

3M (NYSE: MMM) shares jumped about 5% in after-hours trading on Monday after it disclosed an expanded deal to supply Amazon (NASDAQ: AMZN) with data centre products. The stock was reported at $170.80, up 5.43% from its regular-session close of $162.01.

The regular session had ended with 3M down 1.66%, from $164.75 on Friday. The news landed after the US close, so the after-hours quote is a reported indication, not an official price. The US market reopens at 2.30pm UK time today.

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Under the agreement, formalised on Monday, 3M becomes a supplier of optical connectivity and other data centre products to Amazon, expanding an existing relationship. As part of it, 3M issued a warrant, a right to buy shares at a fixed price, to a wholly owned Amazon subsidiary, according to a 3M filing as reported.

The warrant covers up to 3,162,015 shares at $164.89 each over seven years, a total of about $521.4m. The Wall Street Journal reported the stake would be under 1% of 3M.

The structure is the appeal. Some 85% of the warrant vests as Amazon’s payments to 3M build towards $6bn, with the rest tied to undisclosed milestones, so Amazon earns its stake only by buying the products. That ties the deal to 3M’s push into data centres.

Even at the after-hours level, 3M would sit below its closing high of $183.78 on the 12th of August. Monday’s close was about 12% under that peak.

The deal arrives alongside third-quarter results, due before the US open today. The consensus forecast is earnings per share of $2.41, against $2.19 a year earlier.

On the day of its previous results, in July, the shares rose 7.3% from $159.11 to $170.76. The opening gap is therefore likely to reflect the earnings as well as the Amazon news.