Remember the rumor saying Facebook's initial public offering (IPO) could be delayed? Well, the Federal Trade Commision (FTC) has announced a routine investigation into Facebook's planned acquisition of Instagram, which could take anywhere from six to 12 months, so a delay could still be possible.
At least, that's what The Financial Times is reporting, noting that FTC probes are common for most deals over $66 million:
Facebook said in its IPO documents last month that it expected the deal to close in the second quarter. "That's terrifically optimistic," said David Balto, a former policy director at the FTC who now works as an anti-trust lawyer….Competition experts expect that the Instagram merger will ultimately be approved, but they believe regulators will apply close scrutiny to the deal because of the steep price that Facebook paid and the high profile of the companies.
Last month, Facebook announced plans to acquire Instagram for approximately $1 billion in cash and stock, although Instagram reportedly wanted $2 billion from Facebook. The price ended up being much more flexible: Facebook paid $300 million in cash and 23 million shares for Instagram, and there's a $200 million break-up fee if the deal doesn't go through.
Facebook was expecting to close the Instagram acquisition this quarter, meaning that even after Facebook goes public, the deal would total $300 million plus whatever the shares are worth at the end of June. Now it looks like the value of Instagram will not be finalized for a long time.
The first rumor said Facebook will go public in the third week of May: the days of 14, 15, 16, 17, or 18. A second rumor narrowed it down to just two days: May 17 or May 24, claiming the choice will come down to how smoothly the Instagram acquisition goes. A third rumor said May 17, 2012 is the likely candidate. All three warned, however, that anything can still happen, and as I've already noted, a fourth one said everything has been pushed back to June. The most recent rumor says May 18 is the big day.
My bet is Facebook will still go public next Friday. After all, the IPO roadshow has already started, right?
- Facebook IPO: Instagram worth up to $1.1 billion
- Facebook buying Instagram for $300 million, 23 million shares
- Instagram co-founder turned down a job from Mark Zuckerberg
- 10 ways Instagram is to Facebook as YouTube was to Google
- Facebook still has the cash to buy many more Instagrams
- Instagram now top iPhone app
- Bet on Facebook's next buy: Foursquare? Dropbox? Pinterest?
- Why Facebook acquired Instagram for $1 billion