The Orica Ltd (ASX: ORI) share price is plummeting after the company successfully raised $650 million to partly fund a major acquisition.
The explosives company is acquiring geospatial tools manufacturer Axis Mining Technology in a deal worth up to $350 million.
The Orica share price has broken its single-session trading halt this morning with a 9.88% fall at the time of writing. Shares in the company are currently swapping hands for $15.50 apiece.
Let's take a closer look at what's going on with the S&P/ASX 200 Index (ASX: XJO) commercial blasting systems provider.
Orica share price plunges 10% after successful placement
The Orica share price is tumbling after being removed from the freezer following a successful $650 million capital raise.
The placement saw around 40.6 million new shares offered to institutional investors for $16 apiece. That represents a 7% discount on Monday's close.
Its proceeds will go towards the acquisition of Axis. The business will cost the ASX 200 company $260 million in cash upfront.
Orica could also end up forking out up to $90 million in earn-out payments. Such payments are subject to financial performance and other conditions.
The raised money will also help the company fund incremental trade working capital requirements arising from global supply chain dislocations and strengthen its balance sheet.
Commenting on the successful placement, Orica managing director and CEO Sanjeev Gandhi said:
We are extremely pleased and thankful for the support we have received from new and existing institutional investors who recognise the compelling strategic benefits of our acquisition of Axis and support our goal of establishing a leading Digital Solutions platform.
And it's not all over yet. A $75 million share purchase plan will open next week.
It will see shareholders able to grab up to $30,000 worth of new Orica shares for the lower of $16 per share or a 2% discount to the stock's five-day volume average weighted price.
The share purchase plan will close on 26 August.
