VeriSign Inc. (VRSN) saw its stock price plummet 5.79% in after-hours trading on Monday following the announcement of a significant secondary offering by affiliates of Berkshire Hathaway Inc. The offering, which includes 4.3 million shares of VeriSign's common stock, is aimed at reducing Berkshire Hathaway's ownership stake below the 10% threshold.
The secondary offering, managed solely by J.P. Morgan Securities LLC, comes as a strategic move by Berkshire Hathaway to avoid additional regulatory obligations triggered by ownership exceeding 10%. VeriSign, a global provider of internet infrastructure and domain name registry services, will not receive any proceeds from this transaction as it involves existing shares held by Berkshire Hathaway affiliates.
Investors reacted negatively to the news, likely due to concerns about increased supply of shares in the market and the reduction of stake by a major shareholder. The selling stockholders may also grant the underwriter an option to purchase an additional 515,032 shares within 30 days, potentially further increasing the offering size. Following the offering, any remaining shares owned by Berkshire Hathaway will be subject to a 365-day lock-up agreement, which could provide some stability to the stock price in the medium term.
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