Verisign shares pressured by Berkshire Hathaway sale
Berkshire Hathaway cashed out a circa US$1.2bn stake in Verisign through an overnight stock sale on Monday in a strategic move to reduce its stake in the digital domain provider to below 10%.
Sole bookrunner JP Morgan priced the all-secondary sale of 4.3m shares at US$285, the bottom of the US$285–$290 marketing range and a 6.9% discount to the US$305.98 Monday closing share price. The bank conducted a targeted wall-cross before launching the deal publicly.
Despite the wall-cross, Verisign shares tumbled 9.3% Tuesday to US$277.47, well below the offer price on the Berkshire selldown.
Berkshire reduced its Verisign stake to 9.6% from 14.2%, with a further reduction to 9% possible should JP Morgan exercise a greenshoe option to sell another 515,032 shares. That makes Berkshire Verisign’s second largest shareholder, behind only Vanguard (11.2%), according to LSEG data.
The investment conglomerate, which began accumulating the stake in 2012 through its Geico subsidiary, agreed to be locked up from selling again for one year.
The selldown to below 10% subjects Berkshire to less regulatory disclosure, though that burden has been in place for a long time. It also makes it easier to sell stock in the future.
Verisign a week earlier reported moderately strong second-quarter results that saw revenue up 5.9% to US$410m and prompted management to increase revenue guidance for the full year to US$1.65bn. The stock had run up nearly 7% on those results ahead of the Berkshire sale.