Yesterday, 14th January, Hilton Food Group (HFG) posted its financial results. These were overall very positive and it saw the share price rise around 6% in reaction. This rise seemed natural, especially since their SP had been slowly edging lower over the preceding few months. All kind of normal market reactions…until today, when the SP tanked around 12% for apparently no reason!
The only new news I could find was a small bulletin on Reuters (see below) describing a huge transaction of 8.1 million shares around this lower price (would over £85 million in value).
Jan 15 (Reuters) - Hilton Food Group PLC <HFG.L>::BLOCK TRADE - HILTON FOOD GROUP SECONDARY ABB: BOOKRUNNER SAYS TRANSACTION SIZE: 8,106,888 SHARES / C.9.9% ISC OFFER PRICE: £10.50 – £11.00 PER SHARE.
Now, I’ve no idea about ‘Bookrunners’ or even what ‘ABB’ means, so I resorted to Googling away…
Best answer I could find is that the term refers to a sort of third party underwriter who undertake large scale transactions on behalf of large corporate clients. I think ‘ABB’ refers to ‘Accelerated Book Building’ a process where a company offers shares at a fixed (often discounted) price over a very short time-frame to raise capital very quickly.
So, if I’m reading it correctly. HFG has just raised £85 million (without warning) the day after announcing a very good set of results. The company was in great shape and has made no references to any acquisitions as far as I’m aware. Why has it done this? Is this a huge red flag or might it signal a takeover or merger?
Any insight appreciated!