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While this may not be exactly what happened with INTM, here is what often happens with secondary offerings. Usually when the secondary is announced, the stock price comes down in anticipation of dilution if what is being sold are new shares and as a knee jerk reaction if it involves selling shareholders (i.e., why are they selling?. Depending upon how well placed the issue is (i.e., how much demand there is from investors, and you should read that "institutional investors"), there is some discount to the market. Another deciding factor in discount is how much the company will tolerate.

A company like INTM, probably needs the money enough to accept a relatively large discount, especially after the strong run-up it's had. Judging from the performance, I would guess that Chase H&Q had insufficient demand for the stock and that it was placed in the hands of institutions that immediately flipped it which caused the stock to trade down so much. The old, "more sellers than buyers".

All of the shares on the deal were sold at $60. They apparently didn't expect the stock to get crushed because, as you say, why buy it at $60 if you can buy it at $55. My guess is that a lot of people stayed away from the deal because they thought they would buy it cheaper. This goes back to my point that Chase H&Q probably didn't have a very solid "book" of buyers for the secondary. They also appear not to have had any significant buyers in the aftermarket. Hope this helps.

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