GrubHub Inc. said on Monday that the company and some of its biggest shareholders, including its CEO, plan to sell off some of their shares just months after the company went public.
Shares of GrubHub, which debuted on the New York Stock Exchange on April 4, were down more than 9 percent to $38.87 after the Chicago-based online food ordering service filed a preliminary prospectus for the offering.
The company said it plans to offer 1.25 million shares, while shareholders including certain members of the board and management are offering nearly 8.8 million shares.
CEO Matt Maloney, one of the company’s co-founders, plans to offer 183,089 shares in the offering. Maloney would retain more than 1.9 million shares, retaining a stake of more than 2.4 percent in the company, down from his current 2.73 percent, according to the preliminary prospectus.
Once the offering is completed, GrubHub’s executives and directors, along with their affiliates, are expected to own about 24 percent of the company’s outstanding shares.
The two groups planning to sell the largest numbers of shares are entities affiliated with Spectrum Equity and Warburg Pincus Private Equity IX L.P., which each plan to sell just over 1.92 million shares and maintain stakes in the company.
GrubHub said it plans to use its proceeds from the offering for general corporate purposes, which could include investments and acquisitions. GrubHub said it expected to receive net proceeds of about $50.7 million from the offering, based on Friday’s closing price of $42.76 per share.
When Chicago-based GrubHub went public on April 4, its shares rose as high as $40.80 and ended the trading day at $34, a gain of 31 percent from the $26 offer price.
Company insiders are typically prevented from selling their shares during a so-called lock-up period following an IPO, which keeps those early investors from selling their shares right after a company goes public. The lock-up period for GrubHub’s IPO expires on Sept. 30.
However, the underwriters for GrubHub’s IPO agreed to waive lock-up restrictions, permitting the company and selling stockholders to file the proposed registration with the U.S. Securities and Exchange Commission and permitting the company to offer and sell shares, GrubHub said.
The lock-up restrictions for the selling stockholders are set to be waived immediately before the execution of an underwriting agreement, which would enable them to offer and sell shares in the proposed offering, the company said.
Citigroup, Morgan Stanley and BofA Merrill Lynch will act as book-running managers for the proposed offering, GrubHub said. Allen & Company LLC, BMO Capital Markets Corp., Canaccord Genuity Inc., Raymond James & Associates, Inc. and William Blair & Company, L.L.C. will act as co-managers for the proposed offering, the company firstname.lastname@example.org
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