American Stores Co. said it will ask shareholders of the company to approve an increase in the number of authorized shares of its common stock from 100 million to 200 million at its June 18 annual meeting.
The company also said that, contingent upon shareholders approving the increase in authorized shares, directors intend to propose a 2-for-1 stock split. There are approximately 34.5 million common shares outstanding of the current 100,000 authorized.Jeff Cardon, partner and senior research analyst for Wasatch Advisors investment firm, said doubling the authorization of shares is "a typical thing" for companies to do.
"Almost always it doesn't mean anything significant," said Cardon. "We see companies doing that all the time."
Cardon said companies will occasionally ask for an increase in shares that may be issued so that they can be ready to acquire another company and not have to go back to shareholders for authorization to issue more shares.
"If (American Stores) actually issued 200 million shares, that would be another story but you can't predict anything by their asking for the authorization," said Cardon.
As for the proposed stock split, Cardon said that is "standard operating procedure" when the company believes its stock price has risen too high. American Stores was trading this week in the range of $82 per share.
Meanwhile, American Stores directors declared a quarterly cash dividend of 28 cents per share on the company's common stock, payable April 15, 1991, to shareholders of record April 3.
American Stores Co.'s principal grocery and combination food/-drugstore operating subsidiaries include Acme Markets Inc., Jewel Food Stores Inc., Star Market, Skaggs Alpha Beta Inc., Jewel Osco, Lucky Stores Inc., and Alpha Beta Co. American Drug Stores Inc., which operates under the Osco Drug and Sav-on names, is the company's drugstore subsidiary. The company operated 1,848 stores in 35 states as of Feb. 2.