Facebook announced today that its widely-reported deal with Goldman Sachs, which values the company at $50 billion, has closed. The funding included $500 million raised from Goldman and previous investor Digital Sky Technologies in December, as well as another $1 billion raised from Goldman clients outside the United States.
For the most part, this just marks the official acknowledgment of what has been reported already. The company described the deal as “an attractive opportunity to bolster its cash reserves and increase its financial flexibility with limited dilution to existing shareholders.”
Facebook’s press release does include two interesting details — that Facebook had the option to accept $1.5 billion from Goldman’s clients, but decided not to accept the last $500 million, and that Facebook plans to start publicly disclosing its financial numbers by April 2012.
Why did Facebook leave money on the table? Fortune had earlier reported that Facebook was using the money, in part, to buy back shares from its employees, and that the amount it accepted from Goldman would be determined by employee interest in the buyback. Today, Facebook only said:
Facebook made a business decision to limit the offering to $1 billion … There are no immediate plans for these funds. Facebook will continue investing to build and expand its operations.
Another possibility is that Facebook was unhappy with how Goldman handled the deal, specifically the fact that Goldman cut out US investors at the last minute. The supposed reason was that the funding was getting so much publicity that it risked looking like a public offering to regulators. So if Facebook didn’t really need the money, this could have been a way to slap Goldman on the wrist.
As for the public disclosure in 2012, this confirms earlier reports that Facebook planned to cross the Securities and Exchange Commission’s 500-shareholder threshold soon, which would require it to disclose more financial details publicly. Is that a sign that an initial public offering is coming in 2012? That looks like a real possibility, but as noted earlier, it’s not guaranteed — other private companies have started disclosing their numbers publicly without having an IPO right away.
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