Red Cat's CEO Sold Stock Four Days Before Asking Shareholders to Fund His $230 Million Bid
Red Cat bid away roughly seven tenths of its $325.6 million cash pile for Steyr Motors, and the Form 4 filed the evening of the bid shows its chairman and CEO sold $677,000 of stock four days earlier, the fourth insider sale since August with no purchases. Shareholders fund the bid; the people running the company keep selling.
Richard Tang · 2 min read
Red Cat Holdings'−1.39% — Red Cat Holdings, down 1.39 percent today chairman and chief executive sold 150,000 shares at $4.51 on October 15, four days before his company bid €39 a share in cash for Austria's Steyr Motors, a deal Reuters values at about $230 million against $325.6 million of cash Red Cat held on June 30. That is roughly seven tenths of the balance sheet, and the people asking shareholders to fund it have been selling all year: $7.4 million of insider sales over twelve months with no purchases. 1245
The sale is not a reaction. It ran under a Rule 10b5-1 plan adopted on March 31, so it was pre-scheduled. But it sits on a pattern: $1,567,500 sold on August 19, $584,650 on August 13, $1,161,000 on September 18, $676,500 on October 15, all reported in filings, and no insider buying in the record. 156
Four Form 4 sales, no purchases, since August
Data
| Value | |
|---|---|
| 13 Aug | 584,650 |
| 19 Aug | 1,567,500 |
| 18 Sep | 1,161,000 |
| 15 Oct | 676,500 |
Seven tenths of the balance sheet
The offer's financing is still a promise. Red Cat's release calls the bid fully financed, but the offer document that must show it has not been published. 23 The acceptance arithmetic is thin: the bid needs 50% of Steyr's shares plus one, about 2.63 million of 5,251,261, and anchor shareholder B&C Holding Österreich has irrevocably committed only about 788,000, roughly 15%. Steyr's chief executive says he will tender his own shares; nothing locks the rest before the acceptance period ends on December 18. 34
The market is not paying for the bid
The market is not paying for the bid. RCAT closed at $4.68 on announcement day and traded at $4.60 on Tuesday, down 12.05% over five sessions and 42.50% this year. Steyr closed at €36.33 on Tuesday, below the €39 offer, and reports third-quarter results on October 21 against guidance it cut in August to €56–61 million from €75–95 million. 467
RCAT traded below the price its CEO sold at
Data
| Value | |
|---|---|
| 15 Oct sale | 4.51 |
| 19 Oct close | 4.68 |
| 20 Oct trade | 4.6 |
What shareholders should watch
Our read: consolidation of allied defense supply chains is the right direction, and Red Cat deserves credit for securing the engine behind its Variant 7 boat. But incentives matter. A company spending most of its cash while its insiders sell is asking shareholders to carry conviction its own management is not visibly buying. Watch the offer document, and watch whether the committed 15% grows toward 50% by December 18. 346
Deepdive
AI-generated from this story and its cited sources. Not investment advice.
