READ AN UPDATE TO THIS ARTICLE here.
Nestle ADR Stock Ticker – NSRGY
Nestle Stock Split 2008 Date: NOT ANNOUNCED yet
Nestle plans a stock split to make its shares easily tradeable. A press release on Feb 22,2008 titled “2007 milestone year for Nestlé: Sales reach CHF 107.6bn, EBIT margin 14%” states the following:
“Board proposals to the Annual General Meeting
The strong performance in 2007 and the positive outlook for 2008 will enable the Board to propose to shareholders a dividend increase of 17.3% from CHF 10.40 per share to CHF 12.20 per share.
The ongoing share buy-back programme has so far resulted in the purchase of 10,196,000 shares between 24 August 2007 and 5 February 2008. The Board will propose the cancellation of 10,072,500 shares amounting to CHF 5.3 billion. Furthermore, in order to increase the liquidity and tradability of Nestlé shares, the Board will propose a 1-for-10 share split. Should this proposal be accepted, the Board would then divide ADRs by 2.5 to achieve value parity with ordinary shares. ”
What does this mean?
This means the stock in the Swiss Exchange is split 10 for 1. Currently the stock trades at CHF 511.50 in the Swiss market. After the split the stock will go for around CHF 51.10 assuming the stock price is the same on the ex-date.
At today’s exchange rate of 1 CHF =US$ 0.99468, a local trades for $508.778 (or CHF 511.50)
ADR:
The stock ticker is NSRGY. This closed at $127.00 on Friday. The current ADR exchange ratio is 4:1. This means 4 Nestle ADR shares equal 1 local Nestle share.
After the split this exchange ratio will become 4 Nestle ADR Shares = 10 Nestle Swiss shares since 1 Swiss Nestle share will be split into 10 shares.
So to achieve parity ( 1 to 1 ratio) with the local Swiss share we have to do a simple math from the above formula:
4 Nestle ADR Shares = 10 Nestle Swiss shares
So, 1 Nestle ADR Share = 10/4 Nestle Swiss shares
= 2.5 Swiss Shares
Thus after the split 1 NSRGY share will equal 2.5 Swiss shares.
Current of NSRGY = $127.00
After Split Price = $127/2.5 = $50.80 (Assuming price remains the same at the time of split)
Hence the ADR price will be cheaper when the ratio is reduced from 4 to 2.5.
When will the split take place?
We do not know now. The date has not been set yet since the board has to approve it first.
READ AN UPDATE TO THIS ARTICLE here.
How many shares are outstanding?
There are about 393M Swiss shares available now.After the split this will become 3.93B.
Summary:
This split will be good for Nestle. The stock is considered “expensive” by many retail investors and will be at attractive levels after the split. So this stock split will boost liquidity of the Swiss shares and also the corresponding ADR stock in the US.
Check back often as updates will be posted when available.
