<..Please explain the offering. Will it be tomorrow,..>
I understand it will price and trade in the AM (Wed). If market conditions are bad (as rumored), they MAY hold it off, but I doubt it. They usually price it at a discount to the closing print - sometimes by up to a couple of points, but more usually 1/4 to 1.
Also, the underwriters have the right to oversell (technically "short") up to 15% MORE stock than the offering size to syndicate clients ("syndicate" refers to the group of purchasers of the offering). This gives the underwriting firm some liquidity to buy back up to 15% at the offering price to support the bid from flipping, without having to risk firm trading capital. If the stock moves up, rather than having to "cover" the short in the open market at a loss to the underwriter, the company gives the underwriter the right to (up to) a 15% over-allotment allocation. This is known in the industry as the "green shoe". If they use the full 15%, it's called a "full green shoe" (probably more than you wanted to know <g>)
<..will it be a private placement, or dumped on the open market, and will it be the same stock type we currently own?..>
Not really private placement. It's registered stock (just like we own) that, like with IPOs, anyone with an account at the underwriters (in this case, SSB and CSFB as co-managers, with several other firms having smaller amounts of "selling group" stock), can indicate for shares at the offering price. All the shares are allocated and placed prior to the offering, with most of them going to institutions. There will be a LOT of volume on the day it prices, sometimes many times the offering size (remember NASDAQ volume is pretty close to double-accounted). It COULD move lower or higher short term. For instance, I bought RFMD on a secondary a couple weeks ago at $61, and sold the next week at $72). The positive is that the story got the chance to be told to a lot more institutions and institutional brokers (including some significant previously uninvolved foreign managers) - and it is a very compelling and timely story. Net effect IMO is that we move higher from here. |
