Hagerty Inc. shares declined 7.6% in after-hours trading Tuesday after Hagerty Holding Corp. disclosed plans for a sizeable secondary share sale. The Selling Stockholder intends to offer 9 million shares of the company's Class A Common Stock in an underwritten secondary public offering.
Under terms disclosed by the company, the offering also gives the underwriters a 30-day option to purchase up to an additional 1.35 million shares. Hagerty said it will not receive any proceeds from the share sale. The Selling Stockholder will bear the underwriting discount, while Hagerty will cover the remaining expenses related to the offering.
The filing specifies how the net proceeds will be applied: Hagerty Holding Corp. will use the cash to effect a redemption of a corresponding number of its shares for the benefit of the Kim Hagerty Revocable Trust. The company has named J.P. Morgan and Wells Fargo Securities as representatives of the underwriters and as the lead bookrunning managers for the transaction.
Regulatory steps for the offering have been completed, the company said, with a registration statement filed with the Securities and Exchange Commission and declared effective. No additional material about timing of sales or pricing was provided in the announcement beyond the underwriter option described above.
Company operations
Hagerty operates as an automotive enthusiast business that offers vehicle insurance products, conducts auctions, produces media content and runs events. The company reports protecting 3.1 million vehicles across the United States, Canada and the United Kingdom and operates the Hagerty Drivers Club membership community.
The market reaction to the announcement was immediate in after-hours trading, where the shares moved lower following the disclosure of the secondary offering and the related details about underwriting and the planned redemption for the Kim Hagerty Revocable Trust.
What we know and what remains limited
- The planned sale size and the underwriters' 30-day option are disclosed facts; no further detail on timing or pricing of individual tranches was provided in the announcement.
- The company clarified it will not receive proceeds from the sale and identified the intended use of net proceeds by the Selling Stockholder.
- J.P. Morgan and Wells Fargo Securities are named as the offering representatives and lead bookrunning managers.