DST to Buy $100M Of Facebook Shares
Digital Sky Technologies will buy up to $100 million in Facebook stock in a purchase that will give it an almost 3.5 percent stake in the social networking site.
DST co-owner Yury Milner confirmed the purchase, as did Facebook founder and chief executive Mark Zuckerberg.
The deal values Facebook at $6.5 billion, less than the $10 billion the site was valued at when DST paid $200 million for 2 percent of the company’s preferred stock in May.
“I’m pleased that the price DST is offering is much greater than the price originally considered last fall,” Zuckerberg said in a statement, referring to an employee buyback program Facebook launched last year but canceled due to difficult market conditions.
Funds for the purchase were provided in part by DST shareholders, with the rest coming from dividends paid by the company’s other investments, Milner said. He did not say what the other sources of financing were.
DST did not reveal the exact sum it will pay for Facebook’s shares.
Even if DST purchased another 1.5 percent stake in Facebook, it would not obtain a spot on the company’s board of directors, nor is it aiming to do so at this time, Milner said. The investment is a long-term one, he said.
There are no plans to merge Facebook with Odnoklassniki and V Kontakte, the two Russian social networking sites owned by DST, Milner said.
He said he liked Facebook’s rapid growth, and particularly its entry into other countries.
The social networking site is currently available in 63 languages and has 225 million users. Its 2009 revenue is set to grow by 70 percent and exceed $500 million, Zuckerberg said.
In five years, Facebook will earn billions of dollars annually, board member Marc Andreessen in an interview with Time Magazine earlier this year.
Milner, however, said that Facebook lagged behind some Russian sites when it came to earning income from its services.
Facebook was founded in February 2004 and almost immediately attracted an investment of $500,000 from PayPal founder Peter Thiel. Later that year, the company received $12.7 million from Accel Partners, which valued the social network at $100 million. In 2006, Accel Partners and a consortium of other investors gave Facebook another $25 million based on a $525 million valuation.
In 2007, Microsoft bought 1.6 percent of Facebook’s preferred shares, valuing the company at $15 billion.
Milner said DST planned to complete its share purchase by the end of August.