This only is an attempt to get Borders (BGP) share price over $1 to avoid delisting on NYSE.
Borders Group Inc. plans to ask its shareholders to approve a reverse stock split at its annual meeting in May, the Ann Arbor-based bookseller said today.
A reverse stock split would combine multiple shares of Borders stock into one in an effort to increase the value of the shares.
Borders stock is currently trading around 50 cents a share. The company faces being delisted by the New York Stock Exchange this summer if it doesn't get its stock price above $1 a share. A reverse stock split is one way to do that.
In a statement, Borders said it still "reserves the right not to proceed with a reverse stock split if it is not in the best interests of the company."
Borders will hold its annual shareholders meeting on May 21 at the Ann Arbor Marriott Ypsilanti at Eagle Crest.
Just be aware of it, should you see a dramatic price change just this summer for non-results related reasons.
Here is the math, the stock is at $.50 , you have 200 shares and they do a 2 for 1 reverse split. After the split the stock price will now be $1 a share but your number of shares are reduced to 100. No value change in your holdings.
Disclosure: Long BGP