Exclusive: Facebook Exploring Permitting a Tender Offer for $1 Billion of Employee Shares at $60 Billion Valuation
Facebook is exploring permitting a tender offer up to $1 billion of its employee shares, after being approached by a number of big institutional investors about investing in the company, according to sources close to the situation.
The new approximate valuation? An eye-popping $60 billion, sources said, which is a significant increase to a recent $1.5 billion investment round by Goldman Sachs and its international clients that had pegged the social networking behemoth at a $50 billion valuation.
And the reason? Liquidity, allowing Facebook employees to monetize their privately held shares, since the company is not likely to have an IPO for at least a year.
That’s been a big issue for Facebook as it seeks to walk the ever dicier line between being a private company and becoming a public company.
And managing how its shares are dispersed is critical, especially with regulatory concerns about these private secondary markets increasing.
All the machinating is because Facebook has tried hard–via ever bigger funding rounds and ever larger valuations–to delay its IPO, in order to grow its massive 600-million user base away from scrutiny.
The move is not dissimilar to one that the Palo Alto, Calif.-based company did in mid-2009, when one of its major investors, DST, forked over $100 million for employee shares in a transaction that was in addition to a $200 million investment.
At that time, current and former employees of Facebook were able to sell up to 20 percent of their common shares at $14.77 per share at a $6.5 billion valuation.
If completed, the new tender offer would be at a share price almost 10 times that. But sources said interest is high among big institutional investors who want a piece of Facebook before its inevitable initial public offering.
It’s likely the deal will be split between two or more investors, sources added.
A Facebook spokesman declined to comment.
The latest wrinkle is part of a massive race to invest in the winners of Web 2.0, often via secondary market sales.
Silicon Valley venture firm Andreessen Horowitz, for example, confirmed it had bought $80 million in shares of Twitter, in a story first reported here.