Google Hires Goldman, Morgan Stanley for IPO

Google Inc. has hired Morgan Stanley and Goldman Sachs Group Inc. to arrange its initial public offering, which may raise as much as $4 billion, a banker involved in the transaction said Monday.

The expected IPO by the world’s most-used Internet search engine has been a hot topic on Wall Street in recent months. If the deal is worth $4 billion, it would be the biggest IPO since CIT Group Inc.’s $4.9-billion deal in July 2002.

It “will certainly be the deal of the year,” said Sanford Robertson, who founded investment bank Robertson, Stephens & Co. before starting private-equity firm Francisco Partners.

Morgan Stanley and Goldman Sachs will lead a group of underwriters that includes Citigroup Inc., Credit Suisse First Boston, J.P. Morgan Chase & Co., Thomas Weisel Partners and WR Hambrecht & Co., two bankers in the sale said. They spoke on the condition they not be named.

Mountain View, Calif.-based Google may sell a stake of about one-third in the IPO, giving the company a market value of about $12 billion, the bankers said. The company will probably register the shares for sale with the Securities and Exchange Commission this month and sell them by April, they said.

Google, Morgan Stanley and Goldman Sachs representatives declined to comment.

Morgan Stanley has taken public at least six companies backed by Kleiner Perkins Caufield & Byers, one of Google’s venture investors.

Goldman Sachs has arranged IPOs for at least four companies backed by Sequoia Capital general partner Michael Moritz, another venture investor in Google.

Merrill Lynch & Co., which has the biggest brokerage force in the world, lost its bid to help arrange the sale. The assignment for WR Hambrecht, which sells shares via the Web through an auction process, will be its biggest ever.

The Google deal could bring Wall Street firms as much as $280 million in investment banking fees, analysts say.

Google’s Internet site is the most-used in the world for Internet searches, according to research firm ComScore Networks. It was used for 35% of Internet searches by U.S. users in October, ComScore said.

Google probably had revenue last year of about $1 billion and net income of about $200 million, said Eric Martinuzzi, an analyst at Craig-Hallum Capital Group in Minneapolis.