Facebook Readies IPO Filing for Next Week

By SHAYNDI RAICE And RANDALL SMITH

Facebook Inc. could file papers for an initial public offering as early as next week and is currently looking at a deal that would value the social network between $75 billion to $100 billion, said people familiar with the matter.

Facebook could file IPO paperwork as early as Wednesday of next week, and Morgan Stanley is close to winning the “lead left” position in the IPO. Facebook has been valued between $75 and $100 Billion dollars.

The Internet giant is close to picking Morgan Stanley as the lead underwriter for its IPO, these people said, giving the investment bank one of Wall Street’s most coveted assignments. It would mark a setback for rival Goldman Sachs Group Inc.

Facebook could file documents with the Securities and Exchange Commission as early as this coming Wednesday, said one person familiar with the matter. But that is just one scenario Facebook executives are considering, the person said. Executives are also considering filing a few weeks later, the person said.

At a valuation between $75 billion and $100 billion, Facebook is looking to raise as much as $10 billion, said people familiar with the matter. The final valuation will be determined by a variety of factors, people familiar with the matter cautioned, such as investor demand for social media, the IPO market and the health of the European economy.

A $10 billion Facebook offering would rank fourth among U.S. companies, behind Visa Inc., General Motors Co. and ATT Wireless. At a $100 billion valuation, Facebook would be worth about the same as McDonald’s Corp. and nearly half of Google Inc.

Facebook’s IPO has been hotly anticipated as a defining moment for the latest Web investing boom. The site, which was started by Chief Executive Mark Zuckerberg in 2004 out of his Harvard University dorm room, has reshaped how people share information and interact with others on the Web.

In the process, Facebook has spawned new verbs such as “to friend” and a popular Hollywood movie “The Social Network” that detailed the company’s origins. Overall, Facebook now counts 800 million users, with 500 million users logging into the site daily.

The IPO will test Mr. Zuckerberg’s ability to manage a global company whose financial performance will be scrutinized every three months by investors. Facebook also still faces questions about its commitment to its users’ privacy, an issue that had dogged it since its earliest days.

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A Facebook spokesman declined to comment. A Morgan Stanley spokesman also declined to comment.

The race to lead the management of the company’s IPO has been one of the most competitive contests on Wall Street in the past year. For investment banks, leading the offering will likely mean tens of millions of dollars in fees as well as bragging rights.

The IPO is likely to have two or more active managers, people familiar with the matter said. Morgan Stanley is the strong frontrunner for the much-coveted “lead left” position on Facebook’s IPO documents, the people said, but Goldman Sachs is expected to play a significant role in the deal. As a result, Goldman also would likely also snag significant fees.

Still, losing out on the lead position would be seen as a blow to Goldman Sachs, which fought hard for a piece of the deal. Goldman Chief Executive Lloyd Blankfein actively courted at least one Facebook board member in an attempt to win the deal, said a person familiar with the matter.

The firm was seen as having an edge on the IPO after the investment bank orchestrated a $1.5 billion private offering of Facebook shares in January 2011. However, its odds were seen as declining amid a flub in that process that led the bank to limit the offering to non-U.S. investors.

A spokeswoman for Goldman declined to comment.

Morgan Stanley led more U.S. and world-wide Internet IPOs than any other Wall Street firm in 2011, including the leading the offerings of Groupon Inc., Zynga Inc. and LinkedIn Corp. Goldman Sachs led the league for global IPOs of all kinds last year, according to Dealogic, which tracks securities sales.

Facebook’s IPO would cap a recent wave of Web IPOs, some of which have struggled amid growing investor scrutiny of the new crop of Internet companies. In early 2011, professional social network LinkedIn went public with a bang, more than doubling on its first day of trading. Zillow Inc. and other Web companies followed with strong IPOs.

But in the latter half of 2011, daily deals site Groupon and social games maker Zynga went public at valuations below early expectations and their stock performance has since been choppy.

The largest global technology IPO on record was a $5.9 billion offer in 2000 by Infineon Technologies AG, the former semiconductor unit of Siemens AG, Dealogic said.

The largest global Internet IPO was a $2.8 billion sale by World Online International NV, a European Internet service provider, also in 2000. The largest U.S. Internet IPO, the $1.9 billion sale in 2004 by Google Inc. which valued Google at $23 billion, ranks No. 3 among global Internet IPOs.

Article source: http://online.wsj.com/article/SB10001424052970204573704577187062821038498.html