Facebook’s Initial Public Offering (IPO) may be delayed for a week because of procedural complications occurred with the takeover of Instagram, an applications developer, for one billion dollars and the purchase of an AOL’s patent portfolio from Microsoft for $550 million. Facebook recently announced it will take over, for one billion dollars, Instagram, a company that develops software for smartphones, used for photo editing and posting on social networks. Monday, Facebook announced that it will pay 550 million dollars to take over from Microsoft intellectual property rights for hundreds of patents.
Contracts relating to such transactions were signed a few weeks before Facebook entered the final stages of the IPO, which will probably be the largest transaction of its kind ever conducted in the IT industry. Facebook wants to raise about $5 billion through the IPO; the estimated market value for the social networking company could reach $100 billion. The company has set a deadline for the IPO in May, stating that the roadshow will launch on May 7 and trading will start sometime between May 14 and 18.
A source close to the situation said that investors could be forced to wait an extra week because Facebook must discuss the impact of recent acquisitions with the SEC, the U.S. Securities Commission, writes Reuters. Facebook has reported on Tuesday declining revenues in the first quarter compared to the last three months of last year, a first for the company; according to the company, the decline was caused by seasonal trends on the advertising market. Dropping the revenue would question the company’s ability to maintain the explosive growth in recent years.
According to CNBC, the roadshow could now start between May 14 to 18, so that the company’s listing on the stock exchange could be delayed for early or mid June. There is also the danger of a longer delay, which will push the roadshow and trading launch to the end of May. The problem would be the Memorial Day holiday on May 28. A holiday is a bad time for a roadshow or trading launch as the stock market is less liquid at that time.
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