Google slashes IPO value
Regulatory hurdles still to be jumped
Google has slashed the potential maximum value it will raise from its IPO to just $1.9bn by cutting prices and reducing the amount of the company it expects shareholders to sell.
The company lowered its IPO price range to between $85 and $95 per share, down from $108 to $135 per share. Along with the reduction in share price, the company also said the selling shareholders would offer around half as many shares for sale as had originally been planned.
Selling shareholders include the company founders, venture capitalists and other company executives.
The company has requested that the Security and Exchange Commission approves the sale, and declare its registration statement effective from 4pm EDT today (Wednesday). This follows the SEC's failure to approve the sale by 4pm yesterday, as Google had requested.
Once Google gets regulatory approval, bidding will end and the company will start issuing stock.
Google had been heavily criticised for pricing its shares as highly as it did, and was accused of pricing the 'average' investor out of the bidding process. Industry observers were also unhappy that the company elected to issue two classes of stock, and accusations of cronyism abounded.
Against this background, few people watching the IPO will be surprised that the company has decided to lower its auction price. ®
Google's explanation of the Dutch auction process is here.