By RTT News,
December 19, 2013, 07:14:00 AM EDT
(RTTNews.com) - Social networking giant Facebook, Inc. (FB) Thursday said it is commencing an underwritten registered public offering of 70 million shares of its Class A common stock. The stock is down over 4 percent in pre-market trading.
A total of 27,004,761 shares are being offered by Facebook, while 42,995,239 shares are being offered by some selling stockholders, including 41,350,000 shares offered by Facebook Chief Executive Mark Zuckerberg.
Standard & Poor's, a division of McGraw-Hill Financial Inc. (S&P), has announced that, effective the close of trading on December 20, it plans to include Facebook's Class A common stock in the S&P 500 Index.
Shares of Facebook's Class A common stock will be offered primarily to index funds whose portfolios are primarily based on stocks included in the S&P 500 Index.
Facebook intends to use the net proceeds of the offering for working capital and other general corporate purposes.
The company will not receive any proceeds from the sale of shares by the selling stockholders.
Facebook expects that the majority of the net proceeds Zuckerberg will receive upon the sale of shares in the offering will be used to satisfy taxes that he will incur in connection with his exercise of an outstanding stock option to purchase 60 million shares of Class B common stock.
J.P. Morgan, BofA Merrill Lynch, Morgan Stanley and Barclays are serving as joint bookrunners for the offering.
BNP Paribas, Citigroup, RBC Capital Markets, Credit Suisse, HSBC, Standard Chartered and Piper Jaffray are the co-managers for the offering.
Facebook went public in May 2012 at $38 per share and raised $16 billion, the largest ever for an Internet company. The IPO gave the Menlo Park, California-based firm a market valuation of $104 billion, higher than that of Yahoo, Dell, Cisco, Visa, Amazon.com and HP.
However, many clients who invested in Facebook on its debut suffered huge losses as the share fell in the following days, resulting in the company, the exchange and the underwriters facing lawsuits and regulatory reviews. Nasdaq acknowledged that technical glitches affected Facebook IPO trading.
FB, which closed at $55.57 on Wednesday, fell 4.2 percent in pre-market trading on Thursday.
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