Shares of TTM Technologies (NASDAQ:TTMI) have gotten crushed today, down by 11% as of 11:30 a.m. EST, after the company announced a secondary offering.
The secondary offering will consist entirely of a large stockholder selling a substantial portion of its position. Su Sih (BVI) Ltd. Currently owns 27.5 million shares of TTM, which represents a 27.5% stake in the company, but is selling 12 million shares, or over 40% of its holdings. The underwriters have an option to purchase an additional 1.8 million shares. After the offering is completed, Su Sih will have either a 13.7% stake or a 15.5% stake in TTM remaining, depending on underwriter options.
Su Sih is a holding company that is wholly owned by Tang Hsiang Chien, who is the father of Tom C.Y. Tang, TTM's managing director of Asia-Pacific who also serves on the company's board of directors. Beyond this familial relationship, TTM says that it has not had a material relationship with Su Sih within the past three years related to its share ownership. This is also partially by design, as TTM set up a special security agreement in 2010 that specifically denied Tang Hsiang Chien from having any unauthorized access to classified information related to TTM's defense contracts. The holding company has been slowly reducing its position over the years. For instance, Su Sih had a 34% stake as of the end of 2011. Shares have rallied in 2016 to multiyear highs, so Su Sih may be taking the opportunity to cash out -- a move that certainly doesn't inspire a lot of confidence for public investors.