Leidos Holdings Inc. (LDOS) stock plummeted 5.01% in Thursday's intraday trading following the company's announcement of a tender offer to purchase up to $500 million of its outstanding 3.625% senior notes due 2025.
The technology and defense contractor stated that the tender offer will expire on February 20th and is contingent on Leidos successfully issuing new senior notes to fund the repurchase. While debt reductions can sometimes be viewed positively by investors, the market appeared to see this move as a potential drain on cash reserves in the short-term.
However, analysts suggest the bond buyback could also signal that Leidos is positioning itself for future strategic actions such as an acquisition. The company has been looking to diversify its business lines in recent years through purchases of commercial technology firms.