Motorola plans reverse stock split

NEW YORK, USA: Motorola Inc will seek shareholder approval for a reverse stock split in the first quarter following its restructuring into two separate entities.

The company proposed on Friday a reverse split ratio ranging from between 1 for 3 and 1 for 7 shares for Motorola Solutions -- the part of the present company that includes its enterprise mobility business. The move would involve a corresponding decrease in the number of authorized shares of Motorola common stock.

Motorola, which is separating its cellphone and set-top box businesses from its enterprise mobility business, said the proposal is based on an expectation that Motorola Solutions' share price will not reflect its full value after the split-up.

It said it expects the move to improve the liquidity of the stock.

Avian Securities analyst Matthew Thornton said the move does not change Motorola's fundamentals; but if it were approved, investors who cannot buy shares below a certain price could invest in the stock.

"Trying to bring the share price up makes sense, as it will allow them to address a wider investor audience," he said.

Motorola said it would hold a special shareholder meeting on Nov. 29 to seek approval for the move. It said shareholders of record on Oct. 8 would be able to vote.

Motorola is renaming itself Motorola Solutions after the split-up. The cellphone and set-top business will be in a new entity called Motorola Mobility.

It said that the results of the vote would not affect the board's decision to go ahead with the separation, and that even if shareholders voted in favor of the reverse stock split, the board could still decide not to proceed with that maneuver.