DALLAS (AP) -- Dean Foods Co. said Wednesday that it is planning a reverse stock split of its common shares.
These kinds of stock splits reduce the number of shares outstanding and companies typically do it to boost the value of its existing shares.
Dean Foods said the 1-for-2 reverse stock split will be effective after the close of trading on Aug. 26. The dairy company's shareholders voted in May to give the board the discretion to hold a reverse stock split following the spin-off of The WhiteWave Foods Co.
The company's CEO Gregg Tanner said that Dean Foods has unlocked significant stockholder value over the past year through the realignment of its business and the separation of former business units, which includes WhiteWave and its Morningstar division. He said that the reverse stock split will make its stock a "more attractive and cost effective choice" for many investors.
Following the split, every two shares of stock will be combined into one share. This will reduce the number of shares outstanding from roughly 188.5 million to 94.3 million. Shareholders who are entitled to a fractional share will get a cash payment instead.
Dean Foods, based in Dallas, is the nation's largest processor and retail distributor of milk. Its stock price has increased nearly 40 percent over the past year.
Shares fell 29 cents to close at $10.27 Wednesday. The stock added 14 cents to $10.41 in after-hours trading.