Planet Fitness Shares Down After Majority Owners Take Profits In Secondary Offering

Planet Fitness Inc (NYSE: PLNT) dropped 7 percent Tuesday, driven by the announcement of a secondary public offering of 10 million shares.

Planet Fitness reported all of the shares are offered by selling shareholders (who will give underwriters an option to purchase up to 1.5 million additional shares) and thus it won't receive any proceeds from this offering. The stock finished at $19.49 on Monday, significantly higher than the $16 IPO price. It has climbed more than 25 percent in three months.

According to the Planet Fitness's S-1 form filed on Tuesday, investment funds affiliated with TriStar Gold Inc. will own around 41.3 percent of PLNT's Class A shares following the offering, or 39.3 percent in case underwriters fully exercise their option to buy additional shares, and approximately 67.9 percent of Class B shares or 67.3 percent if the option to purchase additional Class A shares is used by the underwriters in full.

In the latter case, their aggregate voting power will reach 56.2 percent, taking into account their Class A share holdings, or 54.6 percent of voting power "if the underwriters exercise in full their option to purchase additional shares of our Class A common stock, and 38.0% of the outstanding Holdings Units, or 36.9% of the outstanding Holdings Units if the underwriters exercise in full their option to purchase additional shares of our Class A common stock."

According to the form, Planet Fitness will still be the "controlled company" and TSG will continue to possess significant influence over Planet Fitness.