Kratos Defense & Security Solutions Inc. (KTOS) experienced a sharp pre-market decline of 6.22% on Friday, continuing the negative momentum from the previous after-hours session.
The sell-off was triggered by the company's announcement of a proposed public offering of $1 billion worth of its common stock. Kratos later priced the offering at $84.00 per share for 14,285,714 shares, with net proceeds expected to be approximately $1.17 billion. The underwriters also have a 30-day option to purchase up to an additional $150 million of shares.
Such large equity offerings typically create short-term price pressure due to investor concerns about shareholder dilution and the increased supply of shares entering the market. Kratos stated it intends to use the proceeds to finance customer and program-targeted acquisitions, fund investments and capital expenditures for national security priorities, and for general corporate purposes.
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