Please ensure Javascript is enabled for purposes of website accessibility

Why Clarivate Stock Dropped on Wednesday

By Evan Niu, CFA - Jun 9, 2021 at 12:14PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The analytics company announced two concurrent proposed stock offerings.

What happened

Shares of Clarivate (CLVT 1.39%) dropped by as much as 15% today after the company announced a pair of proposed stock offerings. The deals will be dilutive to existing shareholders. As of 11:30 a.m. EDT, the stock had partially recovered but was still down 10%.

So what

Clarivate, a technology company that specializes in analytics that went public in 2019 by merging with a special purpose acquisition company (SPAC), is looking to sell $750 million in common stock in addition to $1.25 billion in Series A Mandatory Convertible preferred shares. Additionally, existing shareholders want to sell $250 million in stock through the offering. The offerings will take place concurrently.

An arrow descends against a red stock chart background.

Image source: Getty Images.

The offerings have not yet priced officially, so certain terms for the convertible preferred such as the conversion ratio are not finalized. As far as the common stock offering goes, the largest existing shareholders that are trimming their stakes are Onex and Baring, two funds that had previously agreed  to help take Clarivate public through the SPAC merger. If underwriters exercise the greenshoe option, Onex and Baring will end up still owning 10% and 3.9% of shares outstanding after the offering. Certain executives, including CFO Richard Hanks and director Sheryl von Blucher, are also cashing out some stock.

Now what

The company says it plans to use the net proceeds from the deals to fund a portion of the acquisition of ProQuest, which was announced last month. That $5.3 billion transaction includes a cash component of $4 billion. The offerings are not contingent upon the ProQuest deal closing. If it does not close, Clarivate will use the money for general corporate purposes.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Clarivate Plc Stock Quote
Clarivate Plc
$13.13 (1.39%) $0.18

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.