Facebook, Zuckerberg plan to sell shares worth $3.9 bn

Facebook Inc Chief Executive Officer Mark Zuckerberg is selling shares to help pay taxes, joining the company and board member Marc Andreessen in an offering worth about $3.9 billion.

About 27 million shares will be offered by Facebook, with an additional 41.35 million shares by Zuckerberg and 1.6 million from Andreessen, the company said in a statement today. Shares of Menlo Park, California-based Facebook fell as much as 2.7 per cent.

The follow-on sale, the first that Facebook has filed for since its May 2012 IPO, could raise about $3.9 billion based on the company's closing price yesterday. The move comes a day before Facebook joins the Standard & Poor's 500 Index, an event that triggers demand from index funds and other institutions to own a company's stock. S&P had announced that as of the close of trading on December 20, it plans to include Facebook's Class A common stock in the S&P 500 Index, the company said.

"It's never a positive sign when insiders are dumping massive quantities of stock," said Todd Lowenstein, a portfolio manager with Highmark Capital, which oversees about $19 billion in assets. Yet "the company is now being added to the S&P 500 Index so there will be large demand for the shares from index buying and index hugging money managers. So it seems this will be absorbed without much disruption."

Using proceeds
Facebook said it will use the proceeds for working capital and other corporate purposes, while Zuckerberg will use the majority of his proceeds to pay taxes he will incur in connection with his exercise of an option to purchase 60 million shares.

"We do not currently have any specific uses of the net proceeds planned," the company said in a filing. "We may use a portion of the proceeds to us for acquisitions of complementary businesses, technologies, or other assets."

Shares of Facebook have more than doubled this year. They fell 1.8 per cent to $54.57 as of 10:05 am in New York.

Zuckerberg's share sale, plus a gift of 18 million shares to charity, accounts for about 11 per cent of his Facebook holdings. Along with a share sale for tax purposes and a charity contribution last year, the CEO has sold or gifted about 20 per cent of his Facebook stake.

Andreessen's sale in the follow-on offering forms 35 per cent of his 4.6 million Facebook shares, according to the filing.

Vanessa Chan, a spokeswoman for Facebook, declined to comment beyond the statement. Margit Wennmachers, a spokeswoman for Andreessen's venture-capital firm Andreessen Horowitz, also declined to comment. Bloomberg LP, the parent of Bloomberg News, is an investor in Andreessen Horowitz.