It has been a long time since the Spanish market for listed companies has seen a grouping of shares, in fact, the most recent dates back to 2020, a fact that contrasts with the fact that in the last 24 months more than a hundred have been carried out in the US. It is a movement that, despite appearing to be a simple technical operationhas numerous good implications for value and shareholders.
A Contra Split is a tool that listed companies have to improve the value profile, especially those companies that are trading at low or very low prices (commonly called ‘penny stocks’). The Contra Split consists of reducing the number of shares in circulation and increasing their nominal value, obtaining a series of very beneficial effects for both companies and shareholders.
For example, one of these effects is the stock price stabilization. With a more stable price and reduced volatility, solidity and reliability in the market are increased, in addition to increasing the attractiveness of the value for investors who, due to various demands, do not currently consider the company within their investment radar. –This would be the case of many institutional investors who do not invest in shares below a certain unit value–.
If we focus even more on the impact on the current shareholder, although at first glance Contra Split could seem like a neutral operationsince it does not alter the total value of your investment or the percentage of shareholder ownership in the company, it actually offers several potential benefits that should not be underestimated:
– By improving the perception of the companyfunds and large investors are more likely to be interested in the stock. This can boost its value in the long term.
– Better information and analysis: with greater interest from analysts and institutional investors, it is likely that increase the quantity and quality of information available about the company on the market prepared by independent third parties and the frequency of their analysis.
– Possible improvement in liquidity: In some cases a Contra Split can improve the liquidity of the stock by attracting a more diverse group of investors, making it easier to buy and sell in the market.
However, a Contra Split It is not a magic solution nor is it a measure that alone marks a change of direction in the price of a security. But it is a step that contributes to creating a more favorable environment for long-term growth for some companies, in addition to functioning as a catalyst for a more promising future for investment.
This is, therefore, an important step to improve the perception of and reach a broader universe of investors. Grupo Dia has had two and a half consecutive years of growth in comparable sales and an increase in market share by comparable area in Spain. We want the quote to reflect this excellent performance. It is a measure that has the approval of the majority of our shareholders who, among others, have approved it at our Extraordinary General Meeting on December 27, 2024. We are entering a new stage of growth in better conditions, thanks also to the agreed refinancing, a symbol of the confidence of the banks and the market in the company.