Shares of Blue Buffalo Pet Products fell about 7 percent Tuesday after the natural pet food company said its top two holders will sell part of their stakes in a secondary offering.
Private equity sponsor Invus reduced its position to 44.5 percent from 50.9 percent and the founding Bishop family pared its stake to 6.2 percent from 7.1 percent, according to a Monday filing with the U.S. Securities and Exchange Commission. The two entities together are a controlling group that still holds a combined 50.7 percent.
JPMorgan Securities and Citigroup Global Markets are the underwriters for the 14.3 million shares in the secondary offering expected to close Friday, the natural pet food company said in a release Monday.
Reuters said it confirmed a transaction price of $25, a 4.2 percent discount to company's $26.09 close Monday.
"The secondary is simply the PE (private equity) firm liquidating part of their ownership. I would say that is really the main factor driving shares," Rupesh Parikh, a senior analyst covering food, grocery and consumer products at Oppenheimer, told CNBC in an email.
He noted that Blue Buffalo reaffirmed its guidance last week, and Oppenheimer initiated coverage with an "outperform" rating last Thursday based on the company's position to benefit from positive trends in the pet care industry.
Even with Tuesday's losses, shares of Blue Buffalo are still nearly 30 percent higher for the year so far.