Facebook makes Russian friends to tune of $200 million
Facebook has sold a 2 percent stake in its business to a Russian firm for $200 million. The deal is equivalent to the entire firm being worth $10 billion, though the buyers got a better deal on paper than Microsoft.
To be precise, Digital Sky Technologies has bought a 1.96 percent stake. As with the Microsoft purchase of Facebook stock, DST will not have any right to have staff on the Facebook board of directors, whether as participants or observers.
The firm has also agreed to spend another $100 million buying Facebook stock from sources other than the company itself. That’s likely to mean employees past and present get a chance to make some cash from the shares they’ve earned as part of their job. As it’s up to DST and the stockholders to negotiate a price, this element of the deal will probably be a better guide to the “true value” of Facebook stock.
DST is primarily an investor in East European Internet firms and owns sites which make up 70 percent of page views among Russian speaking sites. As part of the Facebook purchase, DST will work with the site on advertising and search strategies.
The $200 million/1.96 percent deal works out cheaper than the October 2007 Microsoft purchase of $240 million for 1.6 percent. However, it’s difficult to measure the value of those respective deals given that Facebook stock doesn’t have an established market value.
The only real value of the stockholding for both firms is if Facebook is sold for an eight figure price (which seems unlikely in the foreseeable future) or if the firm goes public. That’s looking increasingly likely considering the company recently advertised for a new chief financial officer and specifically asked for candidate’s with experience of heading the finances of a public company.
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May 27th, 2009
Ahhhh – to have billion dollar Internet company without a business model, though to be fair, I suspect in time they’ll work out how to make money from the ludicrous amounts of traffic they get.