Facebook Inc. investors Accel Partners and Goldman Sachs Group Inc. plan to sell as much as $1.8 billion in shares of the top social network, becoming two of the biggest sellers in the planned initial public offering.
Goldman Sachs is selling 13.2 million shares, worth as much as $461.6 million at the high end of the range outlined yesterday by Menlo Park, California-based Facebook. Accel Partners, an early investor in Facebook, intends to sell as much as $1.3 billion of shares.
Facebook unveiled plans yesterday to raise as much as $11.8 billion in the largest-ever Internet IPO. Executives including Chief Executive Officer Mark Zuckerberg and backers such as Digital Sky Technologies will sell a total of 157.4 million shares for as much as $35 apiece, according to a regulatory filing. None will unload their entire holding.
“You don’t like to see insiders getting out, and they’re selling a little more than expected,” said Erik Gordon, a professor at the Ross School of Business at the University of Michigan in Ann Arbor. “It certainly shows in some people’s minds that the price is pretty full, because if you really thought that 12 months later the stock would be 50 percent higher, you wouldn’t leave that on the table.”
At the high end of the range, Facebook would be valued at $96 billion, and executive and investor sales would yield $5.5 billion. Existing shareholders paid an average of $1.11 a share for Facebook, the filing shows.
Goldman Sachs Sale
Facebook is offering 180 million shares to raise funds for general corporate purposes.
While Goldman Sachs is one of the IPO underwriters, it failed to win the lead role after scuttling a private sale of Facebook’s stock to U.S. investors last year. Facebook said in January 2011 it raised $1.5 billion from Goldman Sachs and Digital Sky Technologies, valuing the company at $50 billion. Goldman Sachs, affiliated funds and Digital Sky invested $500 million, while non-U.S. investors in a Goldman Sachs fund bought $1 billion of shares.
Michael DuVally, a spokesman for New York-based Goldman Sachs, declined to comment on the plans to sell Facebook shares. Richard Wong, a partner at Accel Partners, declined to comment.
Zuckerberg will offer 30.2 million of his 533.8 million shares in the sale, bringing him as much as $1.1 billion. The majority of his net proceeds will be used to pay taxes associated with exercising a stock option.
Accel, Digital Sky
Accel, the biggest outside holder, invested $12.2 million in Facebook in 2005 and owns 11.3 percent of Facebook’s Class B shares. At the high end of the proposed IPO price range, Accel’s remaining stake would be valued at about $5.7 billion.
Digital Sky is selling 26.3 million shares to yield as much as $919 million.
Selling may be smart for holders with large stakes who haven’t had a chance to diversify their assets, said Gordon, of the Ross School of Business.
Other selling stockholders include Elevation Partners, Greylock Partners, Microsoft Corp., Zynga Inc. Chief Executive Officer Mark Pincus and LinkedIn Corp. Chairman Reid Hoffman. The investors are selling only parts of their Facebook stakes.
Co-founder Dustin Moskovitz and early backer Sean Parker are holding on to their stakes in the IPO, though both may sell a portion if the underwriters exercise their option to buy additional shares. T. Rowe Price Group Inc. will keep its more than 5 percent holding.