Facebook to increase price range for public share offering

Facebook plans to raise the price range for its initial public offering to US$34 ($44) to US$38 a share from the previous range of US$28 to US$35, according to a person with knowledge of the matter.

The new range may be announced in a regulatory filing as soon as tomorrow, said the person, who asked not to be identified because the plans have not been made public.

Facebook, already planning the largest internet company IPO ever, would raise as much as US$12.8 billion and seek a valuation of as high as US$104.2 billion, based on the upper end of the new range.

Chief executive Mark Zuckerberg, in a roadshow to pitch the IPO to investors, might be winning over sceptics who initially baulked at buying the shares, said Erik Gordon, a professor at the University of Michigan's Ross School of Business.

"Raising the range would be the best signal of what the underwriters are hearing from their institutional buyers who have seen the roadshow," Gordon said. "Despite the doubts, the buyers like what they're hearing."

At the upper end of the new range, Facebook would be valued at 26 times trailing 12-month sales, more than double Google's valuation when the search-engine operator went public in 2004.

The company was already in a position to surpass United Parcel Service as the most valuable company in history to go public in the US, based on market capitalisation, data compiled by Bloomberg and Dealogic show.

Facebook planned to stop taking orders today for its IPO, two days ahead of schedule, a person with knowledge of the transaction said.

The offering of 337.4 million shares is oversubscribed, according to people with knowledge of the matter, who declined to say by how much orders exceeded the amount of stock being offered.

"They're swamped with the orders that are in," said Jon Merriman, chief executive at investment firm Merriman Holdings in San Francisco.

"They just need time to determine the price. They can send the message - the books are closing, send in your orders now."

Some institutional investors had baulked at buying into California-based Facebook over concern about the site's growth prospects, people with knowledge of the matter said last week.

In a Bloomberg Global Poll of more than 1250 investors, analysts and traders, 79 per cent said Facebook did not deserve such a high valuation.

"Facebook's pricing seems quite expensive," said Yves Maillot, head of investments at Robeco Gestions in Paris.

The IPO was also pressing ahead in a "very difficult environment for the US equity market".

- Bloomberg

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_a4 at 16 Sep 2014 18:01:33 Processing Time: 592ms