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Facebook gears up for multi-billion dollar pay-day

Facebook’s stock is being restructured into a two-tier system of Class A and Class B shares.

The social networking site’s current owners are set to convert their stock into Class B shares, which have 10 times the voting power - allowing them to maintain control even if public float leaves them with a minority holding.

The restructure - first reported by The Wall Street Journal - is widely seen as the precursor to an IPO.

It mirrors the dual-class structure put in place by Google founders Sergey Brin and Larry Page shortly before the search giant’s float.

However, Facebook - which claims 300 million active users - denied it has any immediate plans to go public.

The privately-held company will not reveal who owns its private equity shares, but according to the Journal, founder and chief executive Mark Zuckerberg (25) has a holding “in the double digits”. Venture capital firm Accel Partners also owns a chunk.

Neither will Facebook reveal any financials, although Mr Zuckerberg has claimed that the site is now cashflow positive.

Microsoft was the first outside investor, buying a 1.5% stake in October2007 for $US240 million - implying a total value of $US15 billion for the then four-year-old social network.

Subsequent private equity trades saw Facebook’s implied value fall as low as $US3.7 billion.

But a deal stitched up in May, which saw Russian investment company Digital Sky Technologies buy millions of dollars of Facebook employee stock, put the company’s value at $US6.7 billion.

Soon, it may be up to the market.

Facebook’s key rival, the revenue-less Twitter, reportedly turned down an offer of $US1 billion from Google earlier this year.

More by Chris Keall

Comments and questions
1

Very good article Chris on a subject that is very important.

It is funny as I recently came across a book called 'is: The Phenomenon of the Facebook Status' that gives an insight into life in the 21st century via Facebook Statuses and has been receiving fantastic reviews. But it did provide such a feel good factor in me reading all those statuses.
For anyone that is interested, it has a website with a Facebook Status Generator that has been getting a huge amount of hits and all the people at my Uni have been loving it.

http://www.theisbook.com/status-generator

Keep up the good work mate, looking forward to reading more of your stuff