VeriSign (VRSN) shares plummeted 7.35% in Tuesday's pre-market trading session following news that Warren Buffett's Berkshire Hathaway has sold nearly one-third of its stake in the internet infrastructure and domain name registry company for $1.23 billion.
Berkshire Hathaway, which had been VeriSign's largest shareholder, sold 4.3 million shares at $285 each, representing a 6.9% discount to Monday's closing price. The sale reduced Berkshire's ownership stake in the Reston, Virginia-based company to 9.6% from 14.2%. VeriSign stated that the sale was intended to reduce Berkshire's stake below the 10% threshold that triggers additional regulatory obligations.
The transaction, set to close on Wednesday, has sparked investor concerns about increased share supply and the reduction of stake by a major long-term shareholder. Berkshire Hathaway had been investing in VeriSign since 2012, with its stake valued at approximately $4.07 billion prior to the sale. Despite the sell-off, Berkshire's remaining holdings will be subject to a 365-day lock-up agreement, which could provide some stability to the stock price in the medium term. Analysts remain cautiously optimistic, with 2 of 4 analysts covering VeriSign rating the stock a "strong buy," while the other 2 maintain a "hold" rating, with a median price target of $337.
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