* IPO would value Facebook between $77 bln and $96 bln
* Facebook shares to be priced between $28 and $35 per share
By Alexei Oreskovic and Alistair Barr
SAN FRANCISCO, May 3 Facebook Inc aims to raise
about $10.6 billion in Silicon Valley's largest IPO, dwarfing
the coming-out parties of tech companies like Google Inc
and granting the world's largest social network a
market value close to Amazon.com's.
The eight-year-old social network that began as Mark
Zuckerberg's Harvard dorm room project indicated an initial
public offering price range of between $28 and $35 a share on
Thursday, which would value the company at $77 billion to $96
The valuation reflects the company's growth and bullish
expectations about its money-making potential as a hub for
everything from advertising to commerce.
"We certainly haven't ever seen a tech IPO on this grandiose
a scale," said Lise Buyer, a principal with the IPO advisory
firm Class V Group.
Buyer, who worked on Google's 2004 IPO, said the question
about a company "that's already this big and that is raising
this much money is how many of the glory days of growth are in
the past versus how many are ahead."
Facebook stands to raise as much as $12 billion at the upper
end of its planned range. If an over-allotment or "greenshoe"
option is triggered, the company could sweep up a maximum of
$13.6 billion, according to a Thursday prospectus.
Facebook is only getting about half, or $5.6 billion, of
the estimated $10.6 billion that it would raise at the midpoint
of its planned IPO range. About $4.9 billon will go to some
The offering's price range can be adjusted depending on Wall
Investors are expected to flock to the highly anticipated
IPO, though there have been growing concerns about the social
network's longer-term growth and Zuckerberg's majority control.
"People are going to be very comfortable with this
valuation," said Sam Schwerin of Millennium Technology Value
Partners, which owns Facebook shares worth roughly $200 million.
The firm is not selling in the IPO.
"A price range of $28 to $35 will be a relief to some people
who are concerned that they may try to take the highest possible
price because of high demand.
"The amount being raised is noteworthy. Selling stockholders
are raising about $5 billion in the IPO, which is a lot,"
Facebook executives are due to hit the road on Monday,
presenting their investment case to audiences. They will start
in New York, go to other major cities such as Chicago and
Boston, and end up on Facebook's home turf in Menlo Park,
California, according to a schedule obtained by Reuters.
Zuckerberg is expected to participate in the two-week road
show, a source has said, though Chief Operating Officer Sheryl
Sandberg and Finance Chief David Ebersman will lead the
TANTALIZING WALL STREET
Zuckerberg's involvement in the road show will be key for
investors with concerns about the company's long-term strategy
and money-making potential, said Brian Wieser, an analyst with
Pivotal Research Group.
Last week, Facebook reported its first quarter-to-quarter
revenue slide in at least two years, a sign that the social
network's sizzling growth may be cooling just as it prepares to
go public. Its stock should begin trading in about a week or
In a 31-minute road show video posted online on Thursday,
Zuckerberg predicted that in five years almost every software
app would be integrated with Facebook.
Facebook, which plans to list its stock on the Nasdaq under
the ticker "FB", has long tantalized investors with the
prospect of a mega IPO.
Its capital-raising target far outstrips big Internet IPOs
that came before it. Google raised just shy of $2 billion in
2004, while last year Groupon tapped investors for $700
million and Zynga raked in $1 billion.
At the maximum end of the range, Facebook's value would be
close to $100 billion. That would rival Amazon.com's and Cisco
Systems Inc's market values of just over $100 billion,
while surpassing the combined market value of older technology
companies Hewlett-Packard Co and Dell Inc.
In its prospectus, Facebook said the "lock-up" period,
during which employees cannot sell shares after the IPO, would
range from 151 days to 181 days.
Among existing shareholders, the largest seller in the IPO
will be venture capital firm Accel Partners, which will make
about $1.2 billion assuming the shares sell at the $31.5
mid-point. Zuckerberg is selling the next largest chunk of
shares, worth a little under $1 billion.
Some investors think Facebook, which touts 845 million users
worldwide, is setting itself a fairly conservative target.
"The price range may be tactical. They will likely walk the
range up," Schwerin argued.