There are times when $8 billion is not enough. For Google CEO Eric Schimdt, that time is now
The Internet search giant intends to raise more than $2 billion in cash through the sale of 5.3 million shares, hoping to finance its expansion plans and pay for possible acquisitions, according to a document filed lately with the U.S. Securities and Exchange Commission.
It marks the second time Google has returned to the stock market for more money since its ballyhooed initial public offering at $85 a share in August 2004.
The company previously collected $4.3 billion six months ago by selling more than 14 million shares at $295 to fund future growth.
Since then, Google extended a pact with Time Warner’s AOL that included a $1 billion ownership stake, bought dMarc Broadcasting and started a finance hub. As of the start of February, Google had $8 billion in its bank account. The sale comes with Google’s stock down 5% this year, and 16% off an all-time high of $471 hit in early January.
The principal purpose of this offering is to obtain additional capital, Google said in a filing with the Securities and Exchange Commission.
Google expects to use the proceeds from the offering for "general corporate purposes, including working capital and capital expenditures, and possible acquisitions of complementary businesses, technologies or other assets," according to the filing.
The company also said in the filing that it had "no current agreements or commitments with respect to any material acquisitions."
As required, the company listed risks associated with its business that could affect the net proceeds from the offering.
The trading price of our Class A common stock has been volatile since our initial public offering and will likely continue to be volatile, it said. "For example, during the past 12 months, the sales price of our Class A common stock has fluctuated from a high of $475.11 per share to a low of $177.64 per share. The trading price of our Class A common stock may fluctuate widely in response to various factors, some of which are beyond our control."
We estimate that we will receive net proceeds of $2,093 million from our sale of the 5,300,000 shares of Class A common stock in this offering, based upon our assumed public offering price of $394.98 per share, after deducting estimated offering expenses," Google said in its preliminary prospectus supplement, which may be changed. The filing did not say when the offering would occur, but suggested it could happen periodically.
Google’s move was in part sparked by its forthcoming inclusion in the Standard & Poor’s 500 Index at the end of March.
The search giant anticipates that this will cause many index funds to purchase Google stock, and the flotation is designed to meet the additional demand.
Google revealed plans for the stock sale after the market had closed on Wednesday. The company’s share price fell several percentage points in after-hours trading.