(BFM Stock Exchange) – Several listed companies have already used this stock market mechanism to improve the readability of the action, when the nominal, the price displayed of an action, becomes too small. This measure, neutral for the shareholder’s portfolio, presents several options for the carriers of the company.

A company can decide to group its actions if it judges that the price of its action is too low to the point of having become illegible. This is the case of Atos, which will give Tuesday March 25 the kick -off of its operation to regroup its actions.

The French IT group group announced this operation in early March, with a view to regaining in attractiveness after a heavy and painful restructuring.

The consolidation of shares allows a company to reduce the number of securities in circulation, and to increase the price of its stock market course in proportion to the regrouping parity announced by the company. Besides, the company’s market capitalization remains unchanged.

A painless operation for the shareholder

For the shareholder, this operation is neutral. It has no impact on the value of actions and is purely technical. To illustrate this mechanism, nothing like a concrete example.

In the case of Atos, the regrouping parity is 10,000 old shares for new action within the framework of its operation. Taking into account the closing course of Thursday, March 6, the Atos title would therefore go from 0.0049 euros to 49 euros, to translate this grouping of 10,000 old shares for a new one.

Concretely, a shareholder who holds 30,000 old ATOS shares, will be attributed automatically and at no cost, 3 new shares of a nominal value 10,000 times higher than the price of the old action. This is the simplest case since in this example the number of shares represents a multiple of 10,000. On the other hand, a shares that has a number of actions which is not a multiple of 10,000, will be confronted with several options.

Option 1: Buy additional shares or sell excess shares to round the number of ATOS shares to a multiple of 10,000.

For example, a shareholder who holds 27,000 ATOS shares will have to buy 3,000 shares to round off at 30,000 shares and thus have 3 shares after grouping. Or the shareholder will be able to sell 7,000 excess shares, what is called “the breaks”, to fall to 20,000 titles, and thus have the possibility of holding 2 shares after regrouping.

Option 2: Do nothing. In this case, these surplus actions – 7,000 in this case – will be automatically compensated through the reference financial intermediary (for example the bank where its securities account is housed) within 30 days from March 24, 2024.

ATOS specifies that the costs related to any sales or purchase orders due to the management of “broken” is the relationship with the financial intermediary. The company adds that old actions not grouped together will be removed from the side of the grouping period

In a fair for questions dedicated to this operation, the company said that this regrouping will not guarantee courses at the post-regrouping level, that at the closing of April 23. “The course will depend on the exchanges between the supply and the request of the new ATOS actions on Euronext Paris from April 24, 2025”, specifies the IT services group.

Old actions as well as their ISIN FR0000051732 code will automatically disappear on April 24, 2025, an effective date of the grouping of shares. They will be replaced by new actions with a new Isin FR001400x2s4 code.

Note that old actions will no longer be eligible for the deferred settlement service (SRD) from March 27 and must be regulated counting until their last rating day, April 23. As of April 24, the date of their admission to the side, new shares will be eligible for the SRD.

Improve perception

If for the shareholder this operation is neutral, it has, on the other hand, a symbolic virtue for a company. This grouping of shares allows it to see its course get out of the inexpensive category of “Penny Stocks”, these actions whose price is less than 1 euro and which are at the mercy of high volatility. Also, a title relegated to the status of Penny Stock considerably limits its attractiveness to funds and other institutional.

The grouping of shares is not a reserved exercise only for small and medium -sized businesses to escape the Penny Stocks category. In July 2023, Air France-KLM had decided to award a new action with a nominal value of 10 euros against 10 old people worth 1 euro. The number of actions in circulation was logically divided by 10. In February 2024, it was Emeis, the ex-Orpea who had decided to group his actions by 1,000 packages to turn the page of a heavy restructuring.

The grouping of shares is also the mirror operation of the splitting of shares or “split”. The latter results in a division of the number of actions that shareholders have at the time of the operation.

For the shareholder, there too, the operation is completely transparent. And for future investors, this puts the title within reach of a greater number and makes it possible to split its orders more finely if necessary. But for all that a “stock split” is not a non-event: it is above all an indicator of a strong market vigor, unlike the grouping which is consecutive to a strong decline in the title. These two operations have been authorized in France since a decree of October 26, 1973.

The grouping of shares should not, however, be confused with share buybacks. In the first case, the operation has no impact on the value of actions for shareholders and is purely technical. The action buyback is for its part an operation which consists for a listed company to acquire its own shares to support its stock market course and therefore indirectly reward the shareholders who remain invested.

To turn the page on a heckled stock market history

To return to the grouping of shares, this operation allows a company to turn its back on a heckled stock market. Either because it has accumulated disappointments with poor results, or or because it has regularly used dilutive funding that increased the number of actions in circulation.

In the case of Atos, the group carried out several capital increases, one of which is an amount of 233 million euros in December, these multiple operations were registered within the framework of a procedure allowing Atos to find better financial health.

This recapitalization gave rise to the massive issue of new actions in circulation. Currently their number is 190 billion compared to a hundred million million in September.

The shares of shares have suffered a very important dilution after these fundraising given the marked increase in the actions in circulation. At the end of this complete restructuring, the company had quantified this dilution at 99%.

The digital service company thus hopes with this group to turn the page on a stock exchange. Eight years ago, its action was evolved at more than 100 euros and the title was part of the CAC 40 until September 2021.

“Given the number of ATOS shares issued during the capital increases carried out within the framework of the accelerated safeguarding plan of the company and the low value of the action, the grouping of shares aims to find a usual number of shares, reduce the volatility of the course of action and support a new stock market dynamic”, explained the company during the announcement of this grouping of shares.