Facebook has announced that it will be offering 70 million shares to the public on Thursday as it prepares to join the Standard & Poor's 500-stock index on Friday.
The new shares will mainly be offered to index funds that track the S&P 500 and may be required to purchase Facebook stock as a result of its inclusion in the index, which tracks most of the influential companies in the nation.
As of right now, no proce for the shares has been set. That will come a the close of trading on Thursday, but based on the Wednesday closing stock price, The New York Times reports that, based on Wednesday's closing stock price of $55.57, the offering would raise about $3.9 billion.
The company itself will offer 27 million Class A shares - Facebook has two classes of stock, Class A shares are commonly traded and Class B shares hold the majority of the voting rights for the company.
Mark Zuckerberg, Facebook's co-founder and chief executive, will exercise stock options to purchase 60 million shares. He will sell 41.35 million of those shares, using most of the proceeds to pay taxes connected to the exercise of his options, the Times reports.
The news was discovered thanks to a filing with the Securities and Exchange Commission, which detailed the new offering. It revealed that Zuckerberg intended to make charitable gift donations of 18 million shares this month. Based on the current trading price, that would amount to $1 billion for one lucky person.
In addition, Marc Andreessen, a Facebook board member, will also be selling 1.65 million shares.
Facebook said it would use the proceeds form the sale of the 27 million shares for working capital. The market is already bracing itself for the offering as shares for the company were down by about 1.6 percent on Thursday morning. This reportedly reflects the slight dilution that results from a new offering such as this.
