US-based software company Microsoft is set to make a between 3.8 times and 4.8 times paper return on its investment in US-based social network Facebook, valuing its stake at up to $1.15bn, after the latter set its price range late last week ahead of its expected flotation on the Nasdaq stock exchange.
Microsoft is looking to sell 6.56 million shares in Facebook’s initial public offering, which would pay back nearly all its initial investment in the company if the shares are sold at the top end of the range. Microsoft invested $240m in Facebook for its stake in 2007. The details came in the latest update to Facebook’s initial public offering, when the social network said it would sell 180 million A shares at between $28 per share and $35 per share, while its shareholders were selling 157.4 million shares.
Microsoft presently owns 32.8 million (1.8%) B shares in Facebook. Each B share carries 10 voting shares and can be converted into A shares on a one-to-one basis.
The disclosure of the exact size of Microsoft’s stake last week, comes after the software company also sold Facebook 615 patents for $550m last month, which Microsoft had acquired from US-based technology company AOL.
Facebook, however, has admitted Microsoft is one of its competitors. In its regulatory filing, Facebook said: "We face significant competition in almost every aspect of our business, including from companies such as Google, Microsoft, and Twitter, which offer a variety of internet products, services, content, and online advertising offerings."
News provider Fortune has provided a helpful summary of the other institutional shareholders in Facebook, with other corporate venturing units including Russia-based internet services provider Mail.ru (formerly known as Digital Sky Technologies) owning 3.1% of Facebook and planning to sell 11.27 million shares and now unaffiliated group DST Global planning to sell 25.26 million shares of its 131 million holding.
The disclosure of the details of Microsoft’s stake in Facebook came in the same week the software company bought a stake in Barnes & Noble’s e-reader Nook for $300m.