Facebook, the 901-million-member social network, will price its initial public offering at $35 a share, it said in a fling with the U.S. Securities and Exchange Commission.
The Menlo Park, Calif.-company wants to sell 337.4 million shares, which could bring in as much as $13.6 billion, the new filing said. That would be more than double the amount sought three months ago. Facebook's principal underwriters are Morgan Stanley (NYSE: MS), JPMorgan Chase (NYSE: JPM) and Goldman Sachs (NYSE: GS.) In addition, there could be more shares sold as part of an over-allotment issue, depending upon demand.
At that price, Facebook's total valuation is higher than what it suggested when it filed for its IPO on Feb. 1. The IPO would lilely be the biggest in history and could value the company around $100 billion. At that level, it would be around that of Cisco Systems Inc. (Nasdaq: CSCO), the top maker of Internet products, valued at $106.3 billion..
A road show is scheduled to begin Monday, when Facebook CEO Mark Zuckerberg turns 28, and could take about a week. After the underwriters determine demand and a new price, a final IPO price would be set May 17. First public trading could start May 18.
Facebook had planned to sell shares valued at only $5 billion in the IPO, mainly to enable Zuckerberg to pay federal tax liabilities. The IPO documents, last amended on April 23 before Thursday, say the company has no other need for the funds. Now, at the $35 level, Facebook would take in $6.3 billion, which could rise to as much as $8.1 billion under the so-called over-allotment that would be triggered by big demand.
Zuckerberg and other insiders would raise at least $5.5 billion in the sale, the new filing said.
The underwriters could set the share price higher or lower in two weeks, depending upon demand. Last month, when he decided to acquire Instagram, a photo applications service, for $1 billion, Zuckerberg himself suggested the price would be around $25 and obtained approval from his board of directors. Instagram CEO Kevin Systrom agreed to be compensated through a mix of cash and stock.
The new filing also mentions the patent lawsuit brought against it by Yahoo (Nasdaq: YHOO), the No. 3 search engine, for which it has now filed a countersuit. It doesn't discuss further details. Some analysts have suggested Facebook might settle the dispute with Yahoo by offering shares in the IPO, as was the case when Yahoo sued Google (Nasdaq: GOOG) before its 2004 IPO and received shares valued at $230 million.
In its last filing, Facebook disclosed first-quarter performance that indicated its pace is slowing down. While the number of members rose to 901 million from 845 million in December, the company reported net income fell 12 percent to $233 million as revenue fell 7 percent to $1.06 billion. Spending on research and development doubled to $388 million.
In the second quarter, besides Instagram, Facebook said it had acquired 650 patents plus rights to others held by Microsoft (Nasdaq: MSFT), the world's largest software company and a Facebook investor, for $550 million. Some of these patents sold by AOL (NYSE: AOL) to Microsoft are some of the first patents used for Internet search and marketing devised by Netscape Communications and UUNet before they were acquired by AOL.