Facebook Halts Trade for Three Days as it Prepares for IPO
Facebook shareholders are facing a three-day suspension of trading on secondary markets this week, according to people with knowledge of the matter, as the social networking sites prepares for an initial public offering.
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Though buy and sell orders may still be made, transactions won’t be processed by Facebook’s attorneys at Fenwick & West from January 25 through January 27, the people said on condition of anonymity as details on secondary transactions are kept private.
Facebook is considering raising about $10 billion in an IPO valuing the company at more than $100 billion, a person with knowledge of the matter said in November. Companies suspend trading ahead of an IPO filing to make sure investors acan’t buy or sell until all the information is public, said PrivCo CEO Sam Hamadeh.
“Facebook and companies who do this don’t want to expose themselves to lawsuits related to the fact that some people had it before others and were able to trade on it,” said Hamadeh. “The best way to protect yourself is to have no one able to trade.”
However, suspension of trading this week doesn’t necessarily indicate that filing is imminent. Private shares may still be traded on secondary markets between the time of filling and the actual offering, though transactions are more likely to be restricted closer to the time of the IPO, said Hamadeh.
Facebook employees and early stakeholders can buy and sell shares privately using exchanges including SharesPost and SecondMarket. Most buyers are institutional investors
Facebook is valued at $73.4 billion in SharesPost’s website, which takes into account transaction prices, research estimates, and financing round valuations. The last contract listed on SharesPost was completed on Tuesday at $34.50 a share, implying a valuation of $82 billion.
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