By Dean Seal
Fabrinet's stock jumped after the company gave an Amazon.com affiliate a warrant to buy up to 381,922 shares at a higher price than yesterday's close.
The stock was up 9% at $219.97 in premarket trading. Shares were down 8% year-to-date when the market closed on Wednesday and closed roughly in line with where they were trading a year ago.
The maker of outsourced optical components said before the bell that it has entered into a transaction agreement with the Amazon affiliate to acquire the block of shares at an exercise price of about $208.48 apiece. Fabrinet's stock closed Wednesday at $201.88.
The warrant expires 10 years from now and allows for vesting in multiple tranches over the term of the warrant based on payments to Fabrinet from either Amazon or its affiliates under a commercial agreement. If Fabrinet gets acquired or its commercial agreement with Amazon gets terminated by Amazon for cause, the unvested portion of the warrant will vest in full.
Fabrinet said the issuance of the warrant is expected to result in a noncash, stock-based accounting adjustment to revenue of about $4.2 million and will hurt earnings by 12 cents a share. The company cut its earnings outlook for the third quarter accordingly, saying it now expects $2.20 to $2.28 a share and adjusted earnings of $2.43 to $2.51 a share.
Write to Dean Seal at dean.seal@wsj.com
(END) Dow Jones Newswires
March 13, 2025 08:58 ET (12:58 GMT)
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