Wednesday, May 16, 2012

Facebook boosts IPO size by 25%, could top $16 billion

Facebook Inc increased the size of its initial public offering by almost 25 percent, and could raise as much as $16 billion as strong investor demand for a share of the No.1 social network trumps debate about its long-term potential to make money.

Facebook said today it will add about 84 million shares to its IPO, floating about 421 million shares in an offering expected to be priced on tomorrow.

The additional shares will be sold by early investors including PayPal co-founder Peter Thiel, Accel Partners' James Breyer and investment manager Tiger Global Management, the company said in a filing.

The company itself has not increased the number of shares it will sell.

Zuckerberg's voting power will be reduced to about 55.8 percent from about 57.3 percent after the IPO as a result of the issue of additional shares, the company said.

The expanded size, coupled with Facebook's recently announced plans to raise the IPO price range, would make Facebook the third-largest initial share sale in US history after Visa Inc and General Motors.

Facebook raised the target price range to $34-$38 per share in response to strong demand, from $28-$35, according to a filing. That would value the company at $93-$104 billion, rivaling the market value of Internet powerhouses such as Amazon.com Inc, and exceeding that of Hewlett-Packard Co and Dell Inc combined.

The increased price range made it very unlikely that Facebook shares would double on their trading debut as they might have if the company had come out at the low end of its initial price range, Wolff said. He expects a first-day gain of about 10 percent.

Facebook said yesterday that it arrived at the higher IPO price range after one week of marketing the offering - part of a cross-country roadshow in which CEO Zuckerberg has taken the stage to lay out his vision for the company's money-making potential and its top priorities.