ADT's (ADT) shares tumbled 9% in premarket trading Thursday after the company announced plans for a secondary public offering.
The move involves 65 million shares owned by Apollo Global Management affiliates, priced at $6.50 each, marking a 13% discount from Wednesday's close of $7.47.
The expected closing date for the offering is March 11.
Moreover, underwriters, including Morgan Stanley, Barclays, Apollo Global Securities, and RBC Capital Markets, will have the option to buy up to an extra 9.75 million ADT shares from sellers within 30 days.
ADT will not benefit financially from this sale and plans to buy back 15 million shares as part of a $350 million repurchase strategy to mitigate share dilution.
“The Share Repurchase is part of the Company’s existing $350 million share repurchase program. The underwriters will not receive any underwriting fees for the shares being repurchased by the Company,” ADT said in a statement.
The decision for a secondary offering comes days after the security firm’s 2024 revenue forecast fell short of analyst expectations, mainly due to a downturn in its solar business.