Facebook Nets $6.5B Valuation in New Share Sale
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Facebook has confirmed it is moving ahead with the next stage of its deal with Digital Sky Technologies (DST), a Russian investment firm that first bought into the world's biggest social network in May.
Under the new deal, DST is offering to buy up to $100 million of common stock from Facebook employees at a price of $14.77 per share.
The buy-in values Facebook's common shares at $6.5 billion, below the $10 billion valuation that came with the $200 million May deal for preferred stock.
The new deal will allow current and former Facebook employees to sell their shares to DST under terms CEO Mark Zuckerberg said are more favorable than a similar deal Facebook considered and ultimately abandoned last year.
"While individuals must make their own decisions about participating in this program, I'm pleased that the price DST is offering is much greater than the price originally considered last fall," Zuckerberg said in a statement.
A spokeswoman for DST told InternetNews.com that the tender offer will close sometime in August.
Facebook has been veering away from its cone of silence regarding its financials lately, fueling speculation that the company is eventually headed for a public offering.
When Facebook parted ways with its CFO earlier this year, the company took the opportunity to share with reporters hopeful financial indicators. The company at the time said that Facebook had enjoyed five straight quarters of profitability, and that it was looking ahead to a 70 percent jump in annual revenue this year.
In June, Facebook filled its CFO spot in June tapped David Ebersman, a former CFO and executive vice president at biotech giant Genentech, to step in as CFO. Zuckerberg said Ebersman's "success in scaling the finance organization of a fast-growing company will be important to Facebook."
Marc Andreesen, the veteran Silicon Valley entrepreneur who sits on Facebook's board, recently said he expects the company to move past $1 billion in annual revenue within five years.
In October 2007, Microsoft (NASDAQ: MSFT) bought a 1.6 percent stake in Facebook for $240 million, giving the company a sky-high valuation of $15 billion.
As the current deal with DST underscores, Facebook's value has come down considerably, though some observers have noted that even with a value of $6.5 billion, Facebook would still be a larger company than more established media and tech firms, such as CBS and Salesforce.