By Ari Levy, Douglas MacMillan and Lee Spears - Jan 25, 2012 7:28 AM GMT+0700
Shareholders of Facebook Inc., the Internet site preparing an initial public offering, are facing a three-day suspension of trading on secondary markets this week, people with knowledge of the matter said.
While buy and sell orders can be made, transactions won’t be processed by Facebook’s attorneys at Fenwick & West LLC from Jan. 25 to Jan. 27, said the people, who declined to be named because details on secondary transactions are kept private. The halt pertains to trading of Facebook shares only, one of the people said.
Facebook, the largest social-networking site, is considering raising about $10 billion in an IPO that would value the company at more than $100 billion, a person with knowledge of the situation said in November. Companies suspend trading ahead of a filing to make sure that investors can’t buy or sell until all of the information is public, said Sam Hamadeh, chief executive officer of New York-based PrivCo.
“Facebook and companies who do this don’t want to expose themselves to lawsuits related to the fact that some people had it before others and were able to trade on it,” said Hamadeh, whose firm provides research on more than 30,000 private companies. “The best way to protect yourself is to have no one able to trade.”
This week’s halt doesn’t necessarily mean the filing is imminent, the people said.
Private shares can still be traded on secondary markets between the time of the filing and the IPO, though companies are more likely to restrict the transactions closer to the public offering, Hamadeh said.
Rising Valuation
Employees and early stakeholders have been able to sell shares privately using exchanges including SharesPost Inc. and SecondMarket Inc. Buyers are typically institutional investors.
Jonathan Thaw, a spokesman for Menlo Park, California-based Facebook, declined to comment, as did Merredith Branscombe, a spokeswoman for Fenwick & West. Representatives of New York- based SecondMarket, and SharesPost, based in San Bruno, California, declined to comment.
Facebook is valued at $73.4 billion on SharesPost’s website, an estimate that takes into account transaction prices, research estimates and financing round valuations. The last contract listed on SharesPost was completed today at $34.50 a share, or an implied valuation of $82 billion.
To contact the reporters on this story: Douglas Macmillan in New York at dmacmillan3@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net; Lee Spears in New York at lspears3@bloomberg.net
To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net; Tom Giles at tgiles5@bloomberg.net
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