Facebook, the world’s largest social-networking service, is aiming to file for its initial public offering (IPO) as early as next week, according to two people with knowledge of the matter.
The company was discussing a valuation of $75-$100 billion, said the people, asking not to be identified, as the plans haven’t been made public. The timing for the filing was still being discussed and may change, they added.
The IPO would provide funds to help Facebook maintain its expansion and fend off competition from rivals such as Google and Twitter. The company has discussed raising $10 billion in the offering, a person familiar with the matter had said in November. Facebook may set its price at the lower end of the valuation range to entice investors and ensure the stock rises after the IPO, said Anupam Palit, an analyst at GreenCrest Capital Management LLC in New York.
“They might discount it a little bit to make sure the first couple days of trading are very strong,” he said.
Facebook was close to hiring Morgan Stanley to handle the deal, and Goldman Sachs Group would probably play a “major role” in the IPO, the Wall Street Journal said yesterday. The newspaper was first to report that Facebook may file its paperwork as early as next week.
Larry Yu, a Facebook spokesman, declined to comment, as did representatives of Goldman Sachs and Morgan Stanley, both based in New York.
Trading suspension
Shareholders of Facebook faced a three-day suspension of trading on secondary markets that lasted through yesterday, people with knowledge of the matter said this week. While buy and sell orders could be made, transactions wouldn’t be processed by Facebook’s attorneys at Fenwick & West LLC, they added.
Halting the trading, which had allowed employees and early stakeholders to buy and sell shares, didn’t mean the filing was imminent, the people said. Still, some companies suspend trading ahead of a filing to make sure investors can’t exchange shares until all information was public, said Sam Hamadeh, chief executive officer of New York-based PrivCo.
A trading halt also may represent an effort by private companies to ascertain how many shareholders they have.
Co-founded by Mark Zuckerberg in 2004 in a Harvard University dorm room, Facebook has amassed more than 800 million users with an easy-to-use website that lets anyone with an Internet connection construct profile pages, post video and photos and interact with friends. The company has nudged aside competitors such as MySpace and generates sales from advertisers as varied as AT&T Inc, Best Buy Co and Sony Corp.
IPO surge
Facebook would follow a flurry of social media companies holding IPOs in 2011, the biggest year for US Internet offerings in more than a decade, according to data compiled by Bloomberg.
Nineteen companies raised $6.6 billion in 2011 — the most since 2000, when 101 businesses raised $11 billion. Professional-networking site LinkedIn, music-streaming service Pandora Media, daily-deal site Groupon and social-gaming company Zynga all sold shares last year.
Facebook expects to be required by US regulators to disclose financial results by April 30 if it doesn’t go public by then, the company said last year, while announcing an investment from Goldman Sachs and other backers. The $1.5-billion investment valued the company at $50 billion.
