FRANKFURT (dpa-AFX Broker) - A convertible bond issuance by Evotec weighed heavily on the drug discovery company's share price on Wednesday. By midday, the stock had tumbled 9.5 percent to 4.60 euros, making it the worst performer on the SDax small-cap index.
The 125 million euro convertible bond offering was accompanied by a placement of existing Evotec shares. This involved the sale of stock for investors seeking to hedge their positions as part of the placement.
The share price is also likely being pressured by the prospect of dilution. When investors convert bonds into equity, the total number of shares outstanding increases, which in turn reduces earnings per share.
Furthermore, speculative market participants such as hedge funds may be subscribing to the bonds while simultaneously short-selling the stock as a delta-hedging strategy./bek/ajx/stk
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