Chewy Inc. (CHWY) experienced a dip in its share price during after-hours trading on Thursday, following the company’s announcement of a significant stock offering and a concurrent buyback. The news involved a $500 million offering of Chewy common stock by Buddy Chester Sub LLC, an entity affiliated with funds advised by Chewy’s largest shareholder, BC Partners Advisors LP. This selling stockholder intends to grant the underwriters a 30-day option to purchase up to an additional $75 million of Chewy common stock. It’s important to note that Chewy itself will not be selling any shares in this offering and will not receive any proceeds.
In a simultaneous move, Chewy agreed to purchase $300 million worth of its common stock from the same selling stockholder. The purchase price will be identical to the price paid by the underwriters in the offering. Upon completion of the transaction, the repurchased shares will be canceled and retired. Chewy has emphasized that its existing $500 million share repurchase program will remain unaffected by this recent transaction.
This news comes amidst a broader market focus on corporate actions and financial performance. The stock market often reacts to these announcements, particularly when they involve large sums of money and potentially signal shifts in company strategy. While Chewy’s share price dipped in the immediate aftermath of the announcement, it remains to be seen how this will impact the company’s long-term performance and investor sentiment.
