Google raises $4.18 b in follow-up share offer |
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Fri, 16 Sep 2005 01:05
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SAN FRANCISCO: Google Inc. priced its share at $295 in the follow-up offer of 14.16 million shares. The company is thus raising $4.18 billion from the open market. The price is at a slight discount from the search company's recent market value. In the market, the company's shares fell by $8.68 to close at $303 on Tuesday.
Google had priced its shares at $85 at its IPO little over a year ago. The company can generate more funds if its investment bankers decide to sell an additional 600,000 shares. After the sale, the company is estimated to have nearly $7.1 billion in cash, which it is expected to use for acquisitions, investments in people and research and development and to take on challenges from rivals Yahoo! and Microsoft. Google watchers are also predicting the company may get into building a wireless network so that its search engine capability can be further extended.
With a market value of $89 billion, the company is more valuable than older rivals in the online fray like Yahoo! and eBay, but it is yet to capitalise on its strengths to get a march-over over companies like Intel or Microsoft.
Analysts keenly watch the company's moves on China where it is expected to expand. It is also expected to buy faster computers and support services so that its search business can be further consolidated. In China, it faces stiff competition from Baidu.com (Google has a shareholding in this company), the country's top search company, with a 37 per cent market share. China is a favourite hunting ground for tech companies. Even Yahoo acquired Alibaba.com, an online retailer, for $1 billion in August.
Google has already thrown enough hints when it hired former Microsoft executive Kai-Fu Lee to launch a research centre in Beijing. It has bought eight companies since its founding in 1998, including Kaltix Corp., which makes software that facilitates quicker searches by individuals, Keyhole Corp., a satellite-mapping software maker; and Urchin Software Corp., an ad-technology company.
The follow-up sale is the biggest secondary share sale in the U.S. since 1995, according to some analysts, surpassing the $3.99 billion secondary offering by Goldman Sachs in 2000.
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