IPG sells half of Facebook stake at $65.50 billion valuation

Interpublic Group is selling approximately half of its holdings in Facebook at a valuation of $65.50 billion.

Advertising company Interpublic Group (IPG) today announced that it has reached an agreement to sell approximately half of its holdings in Facebook for net cash proceeds of $133 million in a privately negotiated transaction. IPG did not reveal the buyer, the number of shares it would sell, or the price paid per share, but said it will record a pre-tax gain of $132 million upon closing of the sale.

Back in June 2006, IPG paid under $5 million when it made its initial investment in Facebook. Facebook agreed to sell the shares to IPG in exchange for IPG agreeing to spend $10 million with Facebook for clients of its agencies.

In April 2011, IPG's stake was about 0.4 percent of the world's biggest social network. Based on that, this deal values Facebook at approximately $65.50 billion.

"Interpublic formed a strategic relationship with Facebook in 2006 that allowed us to fast-track the growth of our social media offerings on behalf of clients," Michael I. Roth, Interpublic's Chairman and CEO, said in a statement. "Facebook has since become a part of daily life for hundreds of millions of people around the world. Its ubiquity has meant the strategic value of our initial investment has moderated, while the financial value of that stake appreciated significantly. As a result, when an attractive opportunity to divest a portion of our position recently presented itself, we decided that it made sense to do so. Today, we've agreed to sell half of our stake for approximately $130 million."

Facebook is going public next year, possibly as soon as Q1 2012. Three months ago, Facebook's business was estimated to be growing faster than previously forecasted and the company's profits were said to be increasing quickly enough to make a valuation of $100 billion justifiable.

Nobody has invested in Facebook at a $100 billion valuation though. In June 2011, Facebook was valued at $70 billion when Investment fund GSV Capital bought 225,000 shares in the company. In April 2011, a private-market transaction of 100,000 shares of Facebook Class B Common Stock gave the website a valuation of $80 billion. In March 2011, Facebook was valued at $65 billion, when investment firm General Atlantic reportedly purchased roughly 2.5 million Facebook shares from former Facebook employees. In February 2011, Kleiner Perkins Caufield & Byers (KPCB) invested $38 million in Facebook at a valuation of $52 billion.

All these valuations should be compared to $50 billion, because this is the only number that Facebook officially confirmed. In December 2010, the company announced that it had raised $1.5 billion at a valuation of approximately $50 billion, but that it had no immediate plans for the funds and would simply continue to build and expand its operations.

The transaction consisted of two parts: in January 2011, Goldman Sachs completed an oversubscribed offering to its non-US clients in a fund that invested $1 billion in Facebook Class A common stock, while in December 2010, Digital Sky Technologies, The Goldman Sachs Group, and funds managed by Goldman Sachs, invested $500 million in Facebook Class A common stock at the same valuation.

So to summarize, according to Facebook it has a valuation of at least $50 billion, the latest valuation from third party investors is $70 billion, and the highest valuation private markets have given the social network has been $80 billion. Some expect Facebook to be valued at somewhere near $100 billion when it goes public. Most of these numbers were being thrown around prior to Google+'s arrival on the scene and definitely before Google started a price war with Facebook.

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