Facebook, Mark Zuckerberg selling 70 million shares
SAN FRANCISCO — Facebook Chief Executive Mark Zuckerberg is offering more than 41 million shares of Facebook stock to the public as part of a follow-on offering worth about $3.9 billion.
Zuckerberg along with the company and board member Marc Andreessen are offering 70 million shares of Class A stock in the follow-on sale. It is Facebook’s first follow-on offering since its initial public offering in May 2012.
Zuckerberg, who is selling the shares to help pay taxes, will buy Class B shares that have greater voting power, so he will maintain his control over Facebook.
Some 27 million shares will be offered by Facebook, with Zuckerberg offering 41.35 million shares and Andreessen 1.6 million.
The markets pay close to attention to Zuckerberg. He boosted the stock in September 2012 after pledging he would not sell any shares in the company for at least the next 12 months to signal his faith in Facebook’s future.
The latest move comes as Facebook joins the Standard & Poor’s 500 index. The new shares will mostly be offered to index funds that track the S&P.;
Facebook said it did not “currently have any specific uses” for the money it would raise.
It had planned to offer more shares to the public after its IPO but abandoned the idea after its shares plunged below the $38 IPO price.
Shares of Facebook, which have more than doubled this year, fell as much as 2.7% on the news and were at $54.20 in midsession trading.
But S&P; Capital IQ equity analyst Scott Kessler reiterated his “buy” rating on Facebook.
“Zuckerberg’s ownership has declined only slightly since the May 2012 IPO, and the planned sale would only minimally reduce his stake and voting power,” Kessler said. “Facebook also indicates the net proceeds from Zuckerberg’s sale would largely be used to satisfy taxes related to the exercise of an outstanding stock option. Additionally, FB would raise $1.5 billion. We are not concerned by this news.”
This week Facebook announced it had begun testing video advertisements that automatically play in users’ News Feeds in a bid for television advertising dollars.
Facebook and its underwriters also learned that they would have to face a class-action lawsuit from investors who say the company misled them about its financial condition.
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