With stock price at record high, T. Rowe Price plans 2-for-1 split Shareholders to vote on proposal Nov. 10

September 17, 1993|By Ian Johnson | Ian Johnson,New York Bureau

NEW YORK -- Taking advantage of its record-high stock price, T. Rowe Price Associates Inc. said yesterday that it would split its stock 2 for 1.

The Baltimore-based mutual fund company, which has seen profits skyrocket along with the popularity of investing in mutual funds, will recommend the move to shareholders at a special meeting on Nov. 10. If, as expected, it is approved, the split would increase the number of shares to 48 million from 25 million and cut the company's share price in half.

The news pushed T. Rowe Price's stock up to another record close yesterday, as it increased $1.25 to $63. Its stock has soared 40 percent this year.

"It was our gut feeling that this was the right time to split the stock. It was at a record high and expensive for other investment management companies," said Joe Croteau, T. Rowe Price's director of financial reporting.

Other financial services companies generally trade under $40. For example, Alex. Brown & Sons Inc. closed yesterday at $27.25, and Legg Mason Wood Walker Inc., at $29.125.

Mr. Croteau said the stock was in the $55 range when it last split in 1989. A split also would make individual shares less expensive, giving a "psychological" benefit to the stock, Mr. Croteau said.

The company also announced yesterday a quarterly dividend of 21 cents a share, payable Oct. 14 to shareholders of record Sept. 30.

Behind the company's financial surge is the growing popularity of mutual funds, especially the no-load funds that T. Rowe Price sells. More than $1 billion a day flow into the funds industrywide.

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