Facebook Inc. is halting the sale of its shares on secondary markets effective next week as the company prepares to hold its initial public offering in May, according to a person familiar with the matter.
Facebook recently asked firms that arrange trading of its privately held shares to stop doing so, a move intended to reduce churn in its valuation that could complicate matters as it sets an IPO price, according to another person familiar with the matter.
Facebook is planning to raise $5-billion (U.S.) in an offering that could value the company at up to $100-billion, making it the largest IPO in Silicon Valley history.
The May time frame for the high-profile IPO is dependent on the U.S. Securities and Exchange Commission declaring the company’s prospectus effective, the first source noted. Facebook has amended its prospectus three times since filing paperwork to go public in early February.
A Facebook spokesperson declined to comment.
The company has said it wants its shares to trade under the ticker FB, but has yet to announce which exchange it will list its shares on.
With more than 845 million users, Facebook is the world’s No. 1 social networking service and is challenging established Web companies such as Google Inc. and Yahoo Inc. , which compete with Facebook for users’ time online and for advertising dollars.
As Facebook moves towards its IPO, some investors are raising concerns about Facebook’s dual-class share structure, which will give chief executive Mark Zuckerberg control of 56.9 per cent of the company’s post-IPO voting shares. At a recent meeting with financial analysts and investors, Facebook executives suggested that Mr. Zuckerberg will not be very involved with Wall Street. Despite the criticisms, investor demand for equity in Facebook has burned strong for years, with shares of Facebook trading briskly in special secondary markets for private company stock.
SharesPost Financial, a firm that facilitates trading shares of privately held companies such as Facebook, announced on Wednesday that it would cease facilitating transactions in Facebook as of the end of day on Friday “to help ensure the company’s orderly transition into the public markets.”
SecondMarket, another firm that arranges trading in private shares, declined to comment. Bloomberg reported the news earlier Wednesday.