Facebook founder Mark Zuckerberg plans to sell shares in the social network worth close to $2.3bn as the company’s early backers take advantage of the first share sale since the company went public last year.
Zuckerberg is selling 41.35m shares, Facebook said Thursday, representing the largest slice of the 70m shares being offered. Facebook’s shares closed at $55.57 Wednesday.
Facebook said Zuckerberg would use the majority of his proceeds to pay taxes he will incur in connection with his exercise of an option to purchase a further 60m class B shares. Facebook has two types of shares, the commonly traded class A share which is entitled to one vote and class B shares that are entitled to 10 votes.
Following the offering, Zuckerberg is expected to retain control of 62.8% of the company’s voting power, down from 65.2%. This is Zuckerberg’s second share sale.
He sold 30.3m shares, then worth $1.1bn, in Facebook’s initial public offering (IPO) last year.
Facebook said Zuckerberg would use the majority of his proceeds to pay taxes he will incur in connection with his exercise of an option to purchase a further 60m shares.
The company itself will sell about 27m shares, worth about $1.5bn. “We do not currently have any specific uses of the net proceeds planned,” Facebook said in a statement. “We may use a portion of the proceeds to us for acquisitions of complementary businesses, technologies or other assets.”
Other stockholders, including early investor Marc Andreesen, the multi-millionaire Netscape co-founder, will also sell shares. Andreesen is selling 1.6m shares, a stake worth nearly $89m.
Facebook will join the S&P 500 index of the US’s top companies on Friday. The share sale will primarily be offered to index funds that track the index of the most influential companies in the country.
The sale, the first that Facebook has filed since its initial public offering (IPO) in May 2012, could raise about $3.9bn. It comes as Facebook has shaken off the aftermath of its disastrous IPO.
Facebook’s shares sold for $38 initially in a massive share sale that was marred by technical glitches. After the IPO, Facebook’s shares plummeted, dropping as low as $17.73, as investors worried about mobile advertising revenue. The shares took more than a year to pass $38 again.
The company has since reported significant gains in mobile advertising. In October Facebook said mobile ads had driven a 60% increase in revenues in the third quarter.
Mobile ads brought in $880m, 49% of the $1.8bn in ad revenue the company made that quarter.
The share price recovery has added tens of billions to Facebook’s value. The company was valued at more than $100bn at IPO and is now valued at over $130bn – more than Home Depot
The recovery has further boosted the fortunes of the 29-year co-founder. Forbes estimates his wealth at $19bn. The securities and exchange commission filing that detailed the share sale said Zuckerberg intended make a gift of 18m shares to an an unnamed charity this month. Based on the current trading price, the shares would be worth $1bn.