Groupon Founders Will Control Majority Stake Even After IPO
Even after Groupon issues 30 million shares in its initial public offering, its three founders will continue to control more than half of the company’s shares.
According to documents filed with the Securities & Exchange Commission today, Groupon has conducted a two-for-one stock split. In addition, it recapitalized all of its outstanding shares into newly issued shares of Class A and B stock.
This plan was disclosed late last month, but became official as of yesterday.
CEO Andrew Mason, Executive Chairman Eric Lefkofsky and Director Bradley Keywell will now control 58.1 percent of the voting shares through ownership of Class A stock and 100 percent of the Class B shares.
The Class B shares will have 150 votes per share, while the Class A stock will have one vote per share. There are 600.4 million shares of Class A; 2.4 million shares of Class B.
Due to the high concentration of shares owned by the founders, the filing warns that the three will be able to dictate the company’s future when it comes to directors on its board, as well as other transactions, such as a merger or other sale of the company or its assets.
Addressing shareholders, the filing continues: “This concentrated control will limit your ability to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial. As a result, the market price of our Class A common stock could be adversely affected.”
In particular, Mason will control 19.8 percent of the vote, Lefkofsky will control 28.1 percent and Keywell will control 10.2 percent.
Such a move is not unprecedented. Many Web companies, including Zynga and Facebook, are largely controlled by their founders.