Shares of CB Richard Ellis Inc., the world's largest real estate brokerage, fell 23% on Tuesday to near a four-year low after the Los Angeles company dropped plans to raise money through a private offering and instead sell more shares to the public.
In a document filed Monday with the Securities and Exchange Commission, the brokerage said discussions with private investors intended to raise as much as $400 million didn't pan out and were terminated. The company now plans to sell 50 million Class A common shares, raising the number of outstanding shares by about 25%.
CB Richard Ellis is in the mandatory "quiet period" before a public stock offering and unable to comment about it, a spokesman said. Analysts could only speculate about why the market reacted negatively.
"If an effort to raise capital in this environment isn't successful, then other investors figure something is wrong," said analyst Craig Silvers, president of Bricks & Mortar Capital. "Maybe nothing is really wrong, but that is the impression that is given."
CB Richard Ellis reported Thursday that its third-quarter profit fell 65% from last year to $40.4 million, or 19 cents a share.
The company has lost more than 70% of its market value this year as the international credit crunch slowed real estate transactions to a near-standstill in many markets.
Company shares closed down $1.41 to $4.68.