Tuesday, 15 May 2012

Underwriters-Share Price-Greenshoe-Facebook

To Capitalize On Demand, Facebook May Sell 50 Million Extra Shares At Increased $34-$38 Price

Everyone wants a piece of Facebook, so the company's underwriters will likely exercise their option sell a "greenshoe" of up to 50.6 million additional shares, and Facebook will definitely increase its IPO share price range from between $28 and $35 to $34 and $38, I've confirmed with sources very close to the IPO. This means Facebook could sell up to 388 million shares to raise between $13.1 billion and $14.7 billion at a CNBC-reported valuation between $92B and $103B.A greenshoe is an SEC-permitted over-allotment option that can stabilize a stock's price by allowing underwriters to sell up to 15% more stock than the company originally planned to sell, but with the option to buy back the stock at the offering price if the actual price drops below this. By exercising the greenshoe, underwriters including Morgan Stanley, J.P. Morgan, and Goldman Sachs could help Facebook raise up to an additional $1.72 billion to $1.92 billion by selling up to 50.6 million shares, which could prevent high demand and limited supply from causing the share price to skyrocket and making the stock seem volatile."Quite likable indeed, har har" laughs some monocle-wearing banker on Wall Street." read more..

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