Ebos Group fell 9.5 per cent after the company confirmed its largest shareholder Sybos Holdings was selling about a third of its shares at a discount.
Shares of the healthcare and animal product company were trading at $22.60 on Tuesday afternoon, down $2.37 from yesterday. That's the lowest they've been since mid-June.
Sybos, which has a 37.3 percent stake in the company, hired UBS to sell a portion of its shares in a fully underwritten block trade.
It is selling 9.3 per cent of the dual-listed company, or 15 million shares, at $22.50 a share, a 9.9 per cent discount to yesterday's closing price. The rest of its stake will be held in escrow for six months.
Sybos is a unit of Hong Kong-based Zuellig Group, which came on as a cornerstone shareholder when it sold the Symbion pharmaceutical business to the listed firm.
Grant Williamson, a director at Hamilton Hindin Greene, said he thought the drop was a temporary correction.
"It's obviously the main shareholder and to move a parcel that size it sold it at a discount to yesterday's closing price. That does put pressure on the market price.
"It has been one of our best-performing stocks for a long time, is very well managed and is achieving growth overseas, so I think investors will be looking to accumulate the stock," Willamson added.
Greg Smith, head of research at Fat Prophets, said some investors might be surprised at the timing given Ebos recently held a presentation in Australia.
"They are escrowing the remaining stake so that shouldn't be hanging on the share price as much, but they are saying something that doesn't square with full investment."
Smith noted the valuation of Ebos was "getting up there" and said the company is also pushing into a new area, which might be a reason for prudence.
Last month, Ebos said it would pay A$34 million to buy the LMT and National Surgical businesses in its first foray into the medical devices sector.
The acquisition provides an initial entry point and platform for growth into the A$8 billion Australian and New Zealand medical devices sector, Ebos said at the time.
In August, when the company reported a marginal increase in annual profit, Ebos estimated it had about $300-350 million available for acquisitions while keeping debt in check.
A large block of Ebos shares is on the market, reportedly at a 9.9 per cent discount.
Some 15 million shares worth $338m are to be sold with bids due in the morning, according to a term sheet cited by Australian media this evening.
The block represents a 9.3 per cent stake in the dual-listed health care supplier with investment bank UBS conducting the trade on behalf of Sybos Holdings.
The shares are being offered for sale at $22.50 per share, representing a 9.9 per cent discount to the last closing price.
Sybos is the company's largest shareholder with a 37.4 per cent stake as at July 31, according to EBOS' most recent annual report.
According to a report in the Australian Financial Review, Sybos' remaining stake would be put into escrow for six months.
The trade comes hard on the heels of an EBOS investo presentation in Sydney.
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Ebos recently revelaed its latest acquisition as the LMT and National Surgical businesses in its first foray into the medical devices sector.
The company has a long track record of growth through usually small, "bolt-on" purchases, although it has made the occasional large acquisition. It spent $93.6 million on acquisitions in the year ended June.
At its annual meeting last month Ebos chose not to provide specific guidance but told shareholders that trading for the September quarter was "in line with our internal expectations and we reconfirm the group is confident of a significant increase in earnings in the current financial year."
It will have the benefit of winning the Chemist Warehouse Group supply contract that kicked in from July 1 and is expected to add about $1 billion to annual sales.
The company's revenue was $6.9 billion in the year ended June.
That was Mark Waller's last meeting as chairman, a role he took on after managing the company since 1987 until stepping down in 2014.
Ebos shares closed on the NZX at $24.97, down 23 cents, or 0.9 per cent, and have gained 17 percent in the last 12 months.