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Facebook valued at $95bn in IPO range

May 04 2012 09:53 AFP

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New York - Facebook, the company that turned the Web social, has set a price range for an initial public offering of stock that values the company at up to $95bn.

Facebook's IPO would be the biggest ever for an Internet company. Facebook disclosed the price range of $28 to $35 per share in a regulatory filing on Thursday.

At the high end, Facebook and its current shareholders could raise as much as $13.58bn. That happens if the underwriters sell extra stock reserved for overallotments, which they will likely do given the excitement surrounding the IPO.

That's much higher than the 2004 IPO for current record-holder Google, which raised $1.9bn including the overallotment. The IPO valued the company at $23bn. Google is now worth about $200bn.

Facebook's IPO has been highly anticipated, not just because of how much money it will raise but because Facebook itself is so popular. The world's largest online social network has more than 900 million users worldwide.

CEO Mark Zuckerberg, who turns 28 this month, has emerged as a wunderkind leader who's led Facebook through unprecedented growth from its scrappy start as a hangout for Harvard students.

Facebook's offering values the company at $76bn to $95bn, based on the expected number of Facebook shares following the IPO. That's about 2.74 billion, according to Renaissance Capital, an IPO investment adviser.

Facebook's next step is to go on an "IPO road show," where executives talk to potential investors about why they should invest in the stock. On Thursday, Facebook posted a version of its road show online, with appearances from Zuckerberg; the vice president of product, Chris Cox; and other executives.

If all goes well, Facebook's stock is expected to price on May 17 and make its public debut on May 18.

Zuckerberg will keep tight control over the company even after the IPO. He will control 57.3% of the company's voting power, through stocks he owns or because other shareholders have promised to vote his way through shares that they own. This means he will have final say over the biggest decisions facing the company even after it goes public.

Zuckerberg will likely own about 31.5% of Facebook's outstanding stock after the IPO. At the high end of the expected price range, this will make his holdings worth $17.6bn. This would put him at around No. 33 of the Forbes lists of the world's richest people, above the likes of Dell CEO Michael Dell and Microsoft CEO Steve Ballmer.

Facebook's expected valuation will easily surpass well-known corporations such as Kraft Foods. The amount it is trying to raise in the IPO would slot it among the world's 25 largest IPOs, although as recently as November 2010, General Motors raised $15.8bn when it shed majority control by the US government.

Among the IPOs that rank higher than Facebook's, according to Renaissance Capital, are Visa's $17.9bn IPO in March 2008, the largest for a US company, and world-topper Agricultural Bank of China, which raised $19.3bn in July 2010. These figures do not include extra shares issued to meet demand.

Facebook plans to list its stock on the Nasdaq under the symbol "FB."

facebook  |  mark zuckerberg
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