February 11, 2011

Facebook May Let Employees Sell Shares, Mulls Twitter Buy

Online social networking titan Facebook is pondering a move that would allow its employees to sell up to $1 billion of their shares to major institutional investors who want to be part of the largest social network in the world, according to an influential technology blog on Thursday.

Facebook, valued at roughly $60 billion, entertained the idea after a number of major institutions expressed interest in investing in the social network, the All Things Digital blog cited sources as saying.

The valuation would sail past previous forecasts. Last Month, the company raised 1.5 billion dollars of financing led by investment banking firm Goldman Sachs, which valued Facebook at $50 billion.

Facebook is expected to go public possibly in 2012. A spokesman with Facebook declined to comment.

Investors have been enthusiastic about getting their hands on Facebook shares before then and have gone to private exchanges, where shareholders like venture capitalists and former employees have put up some of their stock for sale.

Current employees of Facebook cannot cash in on the company's success, due to being prohibited from selling their shares on private exchanges.

Facebook, in 2009, allowed Russian investment firm Digital Sky Technologies to purchase $100 million of common shares from its employees. DST was also part of the Goldman Sachs deal in January.

Facebook is among several privately-held Web companies that have been sought out by investors looking to buy into before they go public. But liquidity on private exchanges has been low and since Facebook has yet to be forced to publicly report its earnings there is little transparency for investors.

The Wall Street Journal, citing unnamed people familiar with the matter, published a report Thursday stating that Facebook was involved in low-level talks with Twitter Inc. about purchasing the privately held social-tweeting service that has valued the company at $8 to $10 billion.

Twitter had 2010 revenue of $45 million but lost money after hiring and investing in data centers.

Twitter and Facebook both declined to comment on the talks.

Google Inc., which was also reported by the WSJ as being involved in talks with Twitter over a possible purchase, was not immediately available for comment on the matter as well.


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