Facebook (FB) Kept Bankers in the Dark About Instagram Until 11th Hour
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Note to social media giants on the cusp of an IPO: let the bankers know what's up. They have to calculate, evaluate, price, and sell shares, after all.
Facebook (Nasdaq: FB) announced on Monday it will acquire Instagram in a deal valued at $1 billion.
According to the NY Post, bankers looking to push Facebook's $10 billion IPO in the coming weeks were not informed about any talks between Facebook CEO Mark Zuckerberg and Instagram until late in the process. The move has made many on Wall Street question why a deal couldn't wait until after the IPO.
Facebook is still waiting for federal clearance for its IPO. Bankers are expected to start their "road show" early in May.
Proponents of the deal say Facebook's timing may enhance the value of the company, making an IPO that much easier to sell. Those against the deal say timing of the deal shows Facebook saw Instagram more as a threat than an opportunity.
How this will affect the IPO in bankers' eyes is yet to been seen. The acquisition was substantial compared to the cash Facebook generates; last year the social media giant reported free cash flow of $470 million, up substantially from $188 million in 2010 and $66 million during 2009. Despite that, Facebook did enter a new $5 billion credit facility back in March, meaning it had plenty of funds on hand to acquire Instagram.
Current estimates value Facebook somewhere between $75 billion and $110 billion. Wall Streeters miffed by the move say adding instability isn't helping the situation -- a more steadfast company generally draws a better price upon launch.
Facebook (Nasdaq: FB) announced on Monday it will acquire Instagram in a deal valued at $1 billion.
According to the NY Post, bankers looking to push Facebook's $10 billion IPO in the coming weeks were not informed about any talks between Facebook CEO Mark Zuckerberg and Instagram until late in the process. The move has made many on Wall Street question why a deal couldn't wait until after the IPO.
Facebook is still waiting for federal clearance for its IPO. Bankers are expected to start their "road show" early in May.
Proponents of the deal say Facebook's timing may enhance the value of the company, making an IPO that much easier to sell. Those against the deal say timing of the deal shows Facebook saw Instagram more as a threat than an opportunity.
How this will affect the IPO in bankers' eyes is yet to been seen. The acquisition was substantial compared to the cash Facebook generates; last year the social media giant reported free cash flow of $470 million, up substantially from $188 million in 2010 and $66 million during 2009. Despite that, Facebook did enter a new $5 billion credit facility back in March, meaning it had plenty of funds on hand to acquire Instagram.
Current estimates value Facebook somewhere between $75 billion and $110 billion. Wall Streeters miffed by the move say adding instability isn't helping the situation -- a more steadfast company generally draws a better price upon launch.
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