The multinational conglomerate General Electric Company (GE) announced the date for its 1-for-8 reverse stock split to be effective post-close of trading on July 30. The shares will start trading on a split-adjusted basis on August 2. Shares closed down 1.7% at $12.78 on June 18.
Over the years, GE has gradually divested several businesses, including nearly all of GE Capital, without making any related alterations to reduce the share count. (See GE stock chart on TipRanks)
Carolina Dybeck Happe, the company’s Senior VP, and CFO said, “The reverse stock split will better align GE’s number of shares outstanding with companies of our size and scope. It also marks another step in GE’s transformation to be a more focused, simpler, stronger high-tech industrial company.”
Once the stock split is effective, every eight shares of GE’s common stock issued and outstanding, or held as treasury stock, will automatically combine into one share, reducing the company’s float from the current approximately 8.8 billion to around 1.1 billion.
The reverse split will also be reflected in GE’s amended certificate of corporation with a reduced number of authorized shares to a revised par value of $0.01 per share.
The company also stated that no fractional shares will be issued, and shareholders eligible for a fractional share will be paid a cash consideration in lieu of such fractional shares.
In a separate release, the company declared a regular quarterly dividend of $0.01 per share. The dividend is payable on July 26 to shareholders of record at the close on June 28, with an ex-dividend date of June 25.
The company’s shares will continue to trade on the NYSE and other stock exchanges under their current symbols but will have new CUSIP and ISIN numbers assigned to them effective August 2.
At a recent investor conference, General Electric CEO Larry Culp suggested a positive outlook for the company’s Renewable and Healthcare segments and said he was confident about the recovery of the Aviation segment by the second half of 2021.
Following the conference, BofA analyst Andrew Obin reiterated a Buy rating on the stock with a price target of $15, implying 17.4% upside potential to current levels.
The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 5 Buys versus 5 Holds. The GE average analyst price target of $13.89 implies 8.7% upside potential to current levels. Shares have gained 81.5% over the past year.
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