Assessing the Impact of a Citigroup Reverse Split
On April 20, Citigroup shareholders voted to extend the board’s authority to execute a reverse stock split. Because C is the most actively traded stock in the US, largely owing to its low share price and huge public float, a reverse split could have a significant negative impact on US equity and options volume, and on the companies in the market structure sector who benefit from the current high volume in C.
C’s board initially gained shareholder approval for a reverse split in September. That authorization expires at the end of next month, but at last month’s annual meeting shareholders voted to extend it through June 2011, giving the board the power at any time before then to engineer a reverse split using one of seven ratios ranging from 1:2 to 1:30.