Dean Foods Co. (DF) said it would enact a 1-for-2 reverse stock split to help boost the dairy giant’s share price.
The company, which has been pressured lately by higher raw milk prices and increased competition, anticipates the reverse stock split will be effective after trading closes on Aug. 26.
Every two shares of the company’s common stock will be combined into one share, reducing the company’s issued and outstanding stock to about 94.3 million shares from about 188.5 million, according to the company.
The move will not change the company’s authorized number of shares or the par value of the stock, Dean Foods said. Instead, the move will result in a proportionate adjustment to the per-share exercise price and the amount of common stock issuable when stock options are exercised and when restricted stock awards are vested.
Last week, the company, which has been cutting costs, reported that it had swung to a loss in the second quarter due in large part to discontinued operations. It also narrowed its full-year earnings guidance as it warned of a rough third quarter.
The company’s recent breakup left Dean Foods with its fresh dairy business, while its board in May approved the spinoff of its higher-margin soy and organic business WhiteWave Foods Co. (WWAV). Earlier this year, it sold Morningstar Foods to Montreal-based Saputo Inc. (SAPIF, SAP.T), Canada’s largest dairy processor, for $1.45 billion.
Shares of Dean Foods, up 34% this year, were flat after hours at $10.27.
Source: Â WSJ
