INNOVATE Corp. Announces 1-for-10 Reverse Stock Split of the Company’s Common Stock

Rhea-AI Summary

INNOVATE Corp. (NYSE: VATE) has announced a 1-for-10 reverse stock split of its common stock, effective August 2, 2024. The primary goal is to increase the per share market price to meet the NYSE's minimum bid price requirement for continued listing. Trading on a split-adjusted basis will commence on August 5, 2024, under the existing symbol 'VATE'.

Key points:

• Every ten shares will be reclassified into one new share
• Adjustments will be made to outstanding equity awards and convertible securities
• The number of authorized shares and par value remain unchanged
• Computershare is acting as the exchange agent
• Stockholders with book-entry shares need not take action; those with certificates must turn them in

Positive

• Attempt to maintain NYSE listing by meeting minimum bid price requirement
• No change in the number of authorized shares or par value of the Common Stock

Negative

• Potential dilution of shareholder value due to 1-for-10 reverse stock split
• Risk of not meeting NYSE listing requirements despite the reverse split

Insights

Financial Analyst

A reverse stock split is a corporate action where a company reduces the number of its outstanding shares, while proportionately increasing the share price. In this case, INNOVATE Corp. is implementing a 1-for-10 reverse stock split. For each 10 shares an investor owns, they will now hold one share, with a price roughly 10 times higher.

The primary aim of this move is to boost the per-share market price to meet the minimum bid price requirement for continued listing on the NYSE. Companies must meet specific criteria to remain listed, including maintaining a minimum share price. Failing to do so can lead to delisting, which would push the stock to over-the-counter (OTC) markets, potentially decreasing liquidity and investor interest.

While reverse stock splits are often seen negatively, signaling that the company is struggling with a low share price, it’s not always the case. For INNOVATE Corp., this action could stabilize their stock price in the short term and prevent delisting. However, it doesn't change the fundamental value of the company and if underlying issues causing the stock's decline aren’t addressed, the price could fall again post-split.

Investors should watch for management’s strategies to improve the company's fundamentals in the long term, beyond just technical adjustments to stock prices.

Market Research Analyst

This reverse stock split is Strategic. By consolidating shares, INNOVATE Corp. aims to enhance the perception of its stock and attract institutional investors who might have restrictions on buying lower-priced stocks. This move can also make the stock appear more stable and less volatile.

Yet, investors must be cautious. Reverse stock splits can sometimes indicate deeper issues, such as poor financial health or market performance. The company must demonstrate that this is part of a broader strategy to improve operational performance and not just a temporary fix to a price problem.

Looking forward, the effect on investor sentiment will heavily depend on how well the company communicates its broader strategy. Consistent, effective communication and visible improvement in business metrics post-split will be key in maintaining investor confidence.

NEW YORK, July 19, 2024 (GLOBE NEWSWIRE) -- INNOVATE Corp. (“INNOVATE” or the “Company”) (NYSE: VATE), a diversified holding company, announced today that its Board of Directors has approved a 1-for-10 reverse stock split of the Company’s common stock, par value $0.001 per share (the “Common Stock”). The reverse stock split will become effective at 5:00 p.m. Eastern Time on August 2, 2024, after close of trading on the New York Stock Exchange (“NYSE”). The Company’s Common Stock is expected to commence trading on a split-adjusted basis when the markets open on August 5, 2024, under the existing trading symbol “VATE.”

The primary goal of the reverse stock split is to increase the per share market price of the Company’s Common Stock to meet the minimum per share bid price requirement for continued listing on the NYSE. The reverse stock split was approved by the Company’s stockholders at its annual meeting of stockholders held on June 18, 2024.

As a result of the reverse stock split, every ten shares of the Company’s Common Stock issued and outstanding will be automatically reclassified and changed into one new share of the Company’s Common Stock. Proportionate adjustments will be made to the exercise prices and the number of shares underlying the Company’s outstanding equity awards, as applicable, as well as to the number of shares issuable under the Company’s equity incentive plans and conversion of the Company’s outstanding convertible securities. The Common Stock issued pursuant to the reverse stock split will remain fully paid and non-assessable. The reverse stock split will not affect the number of authorized shares of Common Stock or the par value of the Common Stock.

Computershare, Inc. (“Computershare”), the Company’s transfer agent, is acting as the exchange agent for the Reverse Stock Split. Stockholders holding their shares electronically in book-entry form will not need to take any action. Stockholders holding certificated shares will be required to turn in their existing certificates, and all new shares will be issued in book-entry form, unless such stockholder requests otherwise.

Additional information about the reverse stock split can be found in the Company’s definitive proxy statement filed with the Securities and Exchange Commission (the “SEC”) on April 29, 2024, which is available free of charge at the SEC’s website, www.sec.gov, and on the Company’s website at www.INNOVATECorp.com.

About INNOVATE

INNOVATE Corp. is a portfolio of best-in-class assets in three key areas of the new economy – Infrastructure, Life Sciences and Spectrum. Dedicated to stakeholder capitalism, INNOVATE employs approximately 4,000 people across its subsidiaries. For more information, please visit: www.INNOVATECorp.com.

Forward-Looking Statements

Certain statements in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements generally relate to future events, such as the expected timing of the reverse stock split, the impact of the reverse stock split on the Company’s share price, and the Company’s ability to meet the minimum per share bid price requirement for continued listing on the NYSE. You are cautioned that such statements are not guarantees of future performance and that INNOVATE’s actual results may differ materially from those set forth in the forward-looking statements. All of these forward-looking statements are subject to risks and uncertainties that may change at any time. Factors that could cause INNOVATE’s actual expectations to differ materially from these forward-looking statements include INNOVATE’s ability to continue to comply with applicable listing standards of the NYSE and the other factors under the heading “Risk Factors” set forth in INNOVATE’s Annual Report on Form 10-K, as supplemented by INNOVATE’s quarterly reports on Form 10-Q. Such filings are available on our website or at www.sec.gov. You should not place undue reliance on these forward-looking statements, which are made only as of the date of this press release. INNOVATE undertakes no obligation to publicly update or revise forward-looking statements to reflect subsequent developments, events, or circumstances, except as may be required under applicable securities laws.

Contact:

Solebury Strategic Communications
Anthony Rozmus
ir@innovatecorp.com
(212) 235-2691

FAQ

When will INNOVATE Corp's (VATE) 1-for-10 reverse stock split take effect?

INNOVATE Corp's (VATE) 1-for-10 reverse stock split will become effective at 5:00 p.m. Eastern Time on August 2, 2024, after the close of trading on the New York Stock Exchange.

What is the purpose of INNOVATE Corp's (VATE) reverse stock split?

The primary goal of INNOVATE Corp's (VATE) reverse stock split is to increase the per share market price of the Company's Common Stock to meet the minimum per share bid price requirement for continued listing on the NYSE.

How will INNOVATE Corp's (VATE) reverse stock split affect shareholders?

For every ten shares of INNOVATE Corp's (VATE) Common Stock, shareholders will receive one new share. Proportionate adjustments will be made to outstanding equity awards and convertible securities. Shareholders with book-entry shares need not take action, while those with certificates must exchange them.

When will INNOVATE Corp (VATE) begin trading on a split-adjusted basis?

INNOVATE Corp (VATE) is expected to commence trading on a split-adjusted basis when the markets open on August 5, 2024, under the existing trading symbol 'VATE' on the New York Stock Exchange.