Ericsson reverse stock split spells new era
There were times, when companies’ shares were so successful that they looked unaffordable to many retail investors. These companies therefore used to split their shares in two or more, thus making the average price look more appetising. However, times are changing now: some share prices look so cheap that they are now being bulked up by a so called ‘reverse split’. Ericsson is about to do a reverse split of 1:5.
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Telefonaktiebolaget LM Ericsson's (NASDAQ: ERIC) annual general meeting on April 9, 2008 resolved on a reverse split 1:5 of the company's shares. The reverse split has the effect that five shares of series A and five shares of series B, respectively, are consolidated into one share of series A and one share of series B, respectively.
The first day of trading in the company's A and B shares after the reverse split is June 2, 2008.
The record date for the reverse split is June 4, 2008. For those shareholders who on the record date do not hold a number of A shares and B shares respectively equally divisible by five, the surplus shares will be sold at the company's expense and the proceeds of the sale will be distributed among those shareholders around June 19, 2008.
Further, the ratio between the B share and an American Depositary Share (ADS), traded on NASDAQ, will be changed to 1:1. The first day of trading on NASDAQ with ADSs with ratio 1:1 to the consolidated shares is estimated to be June 10, 2008.
A brochure with information on the reverse split and the ratio change between the B share and the ADS is available on the company's web site.
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© Chilli Publishing Ltd 2008 |
30 MAY 2008 |
