Facebook has delayed the expected closing date for its $1 billion plus acquisition of Instagram, and increased the price range of its IPO.
Last month, Facebook announced plans to acquire Instagram for about $1 billion in a mix of $300 million in cash and 23 million shares of Facebook stock, plus a $200 million breakup fee if the deal should fall through.
While industry analysts expect the deal to eventually be approved by the SEC, the government is investigating the deal, routine in any acquisition valued over $66 million. Potentially facing a lengthy investigation that could take anywhere from six to 12 months, the deal has now been pushed back from the second quarter of 2012 to sometime this year, according to the latest amended version of Facebook’s S-1.
The last S-1 issued by Facebook said the deal was expected to close in the second quarter, and reads:
This acquisition is subject to customary closing conditions, including the expiration or early termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (HSR), and is currently expected to close in the second quarter of 2012.
The just-released S-1 filing states:
This acquisition is subject to customary closing conditions, including the expiration or early termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended (HSR), and is expected to close in 2012.
The acquisition had been heavily questioned by the tech community, with many wondering if the price was too high or if the deal closed too fast. Facebook likely tried to buy the company on the fly in order to boost its potential for mobile just ahead of its IPO. The social media giant has been criticized for having a lagging mobile revenue model, and only recently started an advertising platform for mobile. The company’s questionable transition to mobile has been listed as a risk in its IPO filing. The Instagram deal was a move to show the company was addressing the problem.
Facebook also upped the ante on its share price due to sheer demand from $28 to $35 to now $34 to $38 per share. About 337 million shares are up for sale.
“We anticipate that the initial public offering price will be between $34.00 and $38.00 per share,” Facebook said in the the SEC statement.
Therefore the value of Instagram will not be settled for months, if not a year. Given Instagram’s 22,999,412 shares, its value should the deal close could be worth anywhere from $1,081,980,008 and $1,173,977,656.
That’s already $1 billion and some serious change.