Watch out below! The Freedom Foods Group Ltd (ASX: FNP) share price has fallen more than 9% this morning.
What happened?
Following an announcement of a capital raising to fund four acquisitions, Freedom Foods shares entered a trading halt on Wednesday. The diversified foods company said it would raise a total of $75 million, with $10 million issued to new institutions and the rest left over for current shareholders to fund the takeovers. The shares issued as part of the capital raising were to be sold at a discounted price of $4.45 a pop.
This morning, the market finally got the chance to react to the news following the company's successful raising of $62 million from its current institutional investors as well as the $10 million placement.
Retail investors now have the chance to participate in the offer which gives them the right to buy two new shares for every 25 they currently own.
Foolish Takeaway
Freedom Foods shares have been discounted by the market to reflect the news of the acquisitions, but also the price dilution that takes place when new shares are offered. In my opinion, Freedom Foods shares could be a compelling long-term investment. However, shares do not come cheap at today's prices.
