Life Time Group Holdings Inc (NYSE:LTH) shares dropped 1.6% as the company announced that affiliates of Leonard Green & Partners, L.P. and TPG Inc. plan to sell 20,000,000 shares of common stock. The sale is part of an underwritten public offering under Life Time’s existing shelf registration statement with the SEC.

The Selling Stockholders, which include major investment firms, will receive all proceeds from this offering, and the company itself will not benefit financially from the sale. This move comes as part of a reshuffling of the company’s ownership structure, which will see the Selling Stockholders’ group holding around 43.1% of Life Time’s common stock post-offering.

The timing and completion of the offering are subject to market conditions, and there is no certainty regarding the final terms or successful completion of the sale. J.P. Morgan and BofA Securities are acting as underwriters for the offering.

The decision to sell a significant number of shares has likely contributed to the decline in stock price, as current shareholders may be concerned about the potential dilution of their holdings and the implications of the Selling Stockholders reducing their stake. Moreover, the lack of direct financial benefit to Life Time from the offering could be influencing investor sentiment.

The market’s reaction to such announcements can often be attributed to the immediate implications for a company’s stock liquidity and ownership concentration. With the Selling Stockholders cashing out a portion of their investment, the market is absorbing the news and adjusting Life Time Group Holdings Inc’s stock price accordingly.