Russian investment group Digital Sky Technologies has placed a tender offer to purchase up to $100 million of common stock from current and former Facebook employees, we’ve confirmed from a source close to the deal. Employees who would like to accept the offer must accept the terms within 20 business days from today. The offer is for $14.77 per share, valuing the company at $6.5 billion.
Facebook has confirmed the transaction, and sent the following statement from CEO Mark Zuckerberg: “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. This is recognition of Facebook’s growth and progress towards making the world more open and connected.”
This comes just a little over a month after DST invested $200 million in Facebook, purchasing preferred stock that valued the company at $10 billion.
If the offer is fully accepted DST will purchase approximately an additional 1.54% of the fully diluted stock of Facebook. With the two investments combined, DST will own approximately 3.5% of Facebook in total.
The difference in valuation ($10 billion in May v. $6.5 billion today) is not a sign of a lower valuation. The stock DST is acquiring in this tender offer is pure common stock without any special rights or privileges. The May investment was for preferred stock, which includes various voting and liquidity provisions that makes it more valuable. Generally in any liquidity event (an acquisition or IPO), preferred stock will convert into common stock on a 1:1 basis.
This isn’t a complete surprise. In an interview I did with Facebook CEO Mark Zuckerberg and DST Founder and CEO Yuri Milner, both said DST planned to offer to purchase employee stock.
Here’s that interview again in case you missed it:
What’s 3.5% of 0?
+1 LOL
uhmmm $716mill in funding so far? what the heck are they spending their money on? Facebook still sort of…sucks…
Great, the KGB thinks the cold war never ended and will own all of Americans personal data. Yay!
yes i agree ..!! +++++1
does facebook makes money ? I mean they spend and they raise but where are the profits…..
It does, it has a pay per click system for companies that want in facebook network, I think it woth every penny that it supposed it costs.
John
http://www.encu...ntry/JobUsa.htm
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USA Online Jobs
they could sell secure groups-profiles to companies that want walled communities for their internal employees
facebook does not make enough money and one of the reasons for it, is that many advertisers are writing in facebook, but does not pay facebook anything.
that is also the reason that we see a mach bigger growth in social media advertising budgets year over year, but not in facebook revenue.
I guess that in the long term, the only solution for this is platform like commentino http://snipr.com/n8gdm that revenue share advertisers budget with the media (i.e., facebook).
thanks for the post
lim 3.5 -> 0
hmmmmmmmmmm!
Just how is the world is Facebook worth anywhere near $10b. I mean seriously, judging from my use and people i know, it’s being used less and less every day with migration to things like twitter and indeed a lot of people just not bothering with it any more.
Zero business model. Terrible third part apps. Rubbish feed system. Totally closed.
TMZ, whitepages, social networking = fadbook
I am not too savvy about this stuff, but a valuation is a valuation right? What the company’s worth is simply, what its worth. It shouldn’t matter what type of security you own right?
So is Facebook this era’s AOL?
More like the end of the decade MySpace. They’re all just interface fads…
Only difference AOL offered things that could not be found else where during its hay day.
This is either a scam or something. facebook? My best guess is that they are making this announcement to make us believe that they still got something.
I am not too savvy about this stuff, but a valuation is a valuation right? What the company’s worth is simply, what its worth. It shouldn’t matter what type of security you own right?
Take the money and run FB kids. Seriously, the offer isn’t going to get any better.
Interesting DST is offering $14.77/share, I am sure after already investing in preferred stock, they definitely have more inside knowledge to make this move …. good for the employees
This is starting to feel like 1999 all over again, just before the big bust. Huge “valuations” for ad-driven business models that don’t seem sustainable. Luckily these valuations are for private companies and don’t threaten individual investors with publicly held stock, yet.
Has Facebook really issued 440 million shares of stock?
I had the same question. Doesn’t that seem kind of high for their stage of development? How many rounds have they had?
Facebook is wayyyy over-valuated. They still can’t figure out how to monetize on their huge user base.
Traffic coming to social networks is not focused – all the ads I’m getting their are generic spam ads (trade stocks, dating, blabla).
Anyway, great news for the employees!!
DST’s CEO Yuri Milner also owner of the biggest Russian (and all exUSSR) social network (VKontakte) and has share in second one (Odnoklassniki). I think somedays those huge networks join their databases into Facebook’s.. World domination, huh?
FaceBook employees take the DSToffer. In a tough bear market this is a great offer. I really cannot imagine the stock doing that well it is not logical, also it is not Google. With a good offer from DST you have hundreds of other stocks to invest in that will yield a better profit. Trying to sell this stock at IPO will be insane. If you unsure keep a little.
Informal survey results: Friends/coworkers only use fb for the stream and photo sharing. The rest, like apps, is bumf. General conclusion: Twitter + flickr > fb. Facebook’s time has passed. Attempts to commercialize either as pay-as-u-play or ad-supported will result in total drop in use.
Dump that stock and cash in while you still have a chance.
Sweet – Major cash infusion to the local real estate market on it’s way. Just watch those 2-3mil mid-peninsula prices hang in there an climb.
@Brandon I don’t think they should
sounds like something that came out of august.
how many shares did most 1st-2nd year employees get on average? lets just say 10,000 shares. 140K, taxed at almost 50% so like 80K or so?
Interesting
I did a piece as well with a link to the interview
http://www.exam...make-a-killing-
“Generally in any liquidity event (an acquisition or IPO), preferred stock will convert into common stock on a 1:1 basis.”
NOT true for acquisitions. Did you really work at Wilson?
facebook is the company that will make or break web 2.0 and social networks. They are the best in breed for social networks they have the most users, people are willing to share content, it has the possible ability to open up other revenue streams besides advertising, such as virtual goods, facebook connect with payment platform, etc. That no other social network can currently do. The other streams of revenue besides advertising is the most important because if they can get that right facebook will be very valuable.
also you need to realize that social networking will go through a standardization process where facebook has the ability to control 90% of the social media industry, since the network effect applies, the value of the network will increase the more people go on it.
As a result, $200 million is a good amount of money to make a bet on a company that will determine the success and failure of social media and networks.
For Facebook employees, it has never been about the money. It has always been about building a global social network to help facilitate the exchange of ideas. It has always been about empowering the general populace.
Not a single Facebook employee would be willing to exchange even one billion dollars for each share if it in any way hindered the dream of building the world’s greatest social network.
Kudos to all Facebook employees for making the world a better place.
lol, i bet a lot of people at facebook would do the exact opposite of what you just stated if the price was right.
You are perhaps the dumbest human alive
Not a single employee would be willing…
BWAHAHA you sir, to put it nicely, are out of your fucking mind…
In Soviet Union, best way to launder money is with foolish American investment. What a country!
When and where ‘we’ (=the people) could buy some stocks?
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http://apps.fac...er-trends-buzz/
hillarious. We thought we would never see anything like this..LOL
That’s alot of money to be investing in Facebook
i am very impressed with zuck in this interview. he’s way more savvy about the business and financing market than i would have anticipated. he’s definitely scalable as a CEO.. VCs take note: don’t go replacing guys because you can. make it a last resort.
and i dont get the critics of this round. these are the same people who poopoo’d google’s IPO price. i think facebook prices at a subatantial premium to this round when it goes public.