Anticipation swirls around Facebook on eve of its IPO
NEW YORK — Insiders and early Facebook investors are taking advantage of increasing investor demand and selling more of their stock in the company’s initial public offering, the company said Wednesday.
Facebook said in a regulatory filing that 84 million shares, worth up to $3.2 billion, are being added to what’s shaping up to be the decade’s hottest IPO.
Facebook’s stock is expected to begin trading on the Nasdaq Stock Market on Friday under the ticker symbol “FB.”
The entire increase comes from insiders and early investors, so the company won’t benefit from the additional sales.
The biggest increases come from investment firms DST Global and Tiger Global. Goldman Sachs is doubling the number of shares it is selling. Facebook board members Peter Thiel and James Breyer are also selling more shares.
Founder Mark Zuckerberg isn’t increasing the number of shares he’s selling.
The news comes a day after Facebook raised the expected price of the stock to a range of $34 to $38 per share, up from its previous range of $28 to $35.
At the high end of the price range, the IPO would raise $16 billion without the overallotment option reserved to meet extra demand. That would make it the third-largest U.S. IPO in history, ahead of General Motors in 2010, according to Renaissance Capital.
$100 BILLION VALUE
The IPO is the most anticipated in years and would value Facebook overall at more than $100 billion.
The offering is expected to get a final price tonight.
In a filing with the Securities and Exchange Commission, Facebook said current shareholders are now offering approximately 241 million shares, up from about 157 million shares previously.
Even though Zuckerberg isn’t increasing the number of shares he is selling, the additional sales will trim his voting control to 55.8 percent from 57.3 percent. That’s because he has voting control over some shares now owned by investment firms, which will be sold in the offering.
The run-up to Facebook’s IPO occurs as companies debate the effectiveness of Facebook as an advertising platform. That examination sharpened Tuesday, when General Motors Co., the nation’s largest automaker, said it would stop advertising on Facebook.
At the same time, however, GM competitor Ford Motor Co. reaffirmed its commitment to Facebook, saying on Tuesday that its relationship was stronger than ever.
Facebook has more than 900 million users who log in at least once a month, but it makes only a few dollars per year from each one, chiefly through advertising. Advertisers have been complaining that it’s difficult to make good use of Facebook.
A person briefed on GM’s advertising said the company will stop running paid advertising on Facebook by mid-summer because advertising agencies and third-party companies that reviewed the ads determined the company wasn’t getting much back for its $10 million in annual spending. The person, who asked not to be identified because GM’s ad strategy is private, said the Facebook ads didn’t generate much in the way of action by consumers to consider GM products.
GM will, however, maintain Facebook pages for all of its brands and models. These are popular and do generate consideration of its products, the person said. But they don’t generate revenue for Facebook.
GM spends about $30 million a year creating content such as pictures and videos to post on the pages, the person said.
DITCHING CITIZENSHIP
How much will Facebook cofounder Eduardo Saverin save by giving up his U.S. citizenship?
At least a cool $67 million in federal taxes according to analysis by Bloomberg.
And it gets even better for Saverin because his adopted home of Singapore does not collect capital gains tax. That means that any profit Saverin earns from future appreciation of his Facebook stock will be tax free. Still, Saverin’s spokespeople are adamant the 30-year-old billionaire’s decision to renounce his U.S. citizenship has nothing to do with tax evasion and everything to do with wanting to establish a permanent residence in Singapore from which to invest in Asia.
However, if you’re wondering why a guy sitting on more than $2 billion in Facebook shares would even care about a paltry $67 million, remember that the $2.4 billion number is Saverin’s paper value, while the $67 million he’d owe in federal taxes would have to come out of his pocket.
Peter Svensson of The Associated Press and Deborah Netburn of Los Angeles Times contributed to this report.
