New York-based advertising and marketing firm Interpublic has reached an agreement to sell approximately half its stake in Facebook, Inc., to an undisclosed buyer, for net cash proceeds of $133 million, the company has said on Monday.
Upon closing the sale, the company expects to record a pre-tax gain of $132 million. Interpublic had invested in the world's No. 1 social networking company in 2006.
"Its ubiquity has meant that the strategic value of our initial investment has moderated while the financial value of that stake appreciated significantly. As a result, when an attractive opportunity to divest a portion of our position recently presented itself, we decided that it made sense to do so," said Michael I. Roth, chairman & CEO of Interpublic.
According to a Financial Times report, Interpublic had invested a little less than $5 million for its stake five years ago and held around 0.4 per cent early this year. This means Interpublic has sold around 0.2 per cent stake in Facebook for $133 million and, thereby, values the social networking firm at around $66.5 billion.
This appears to be a risk-balancing strategy by Interpublic. While some analysts have been estimating an asking valuation of $100 billion for Facebook during its public float, which is expected in a few months, others have been more cautious as the recent market crash has brought out some froth in corporate valuations, especially the Internet firms.
However, in June this year, investment fund GSV Capital Corp bought 225,000 shares in Facebook at $29.28 per scrip, valuing the SNS at about $70 billion. Interpublic had also said that it was keen to raise its share repurchase plan by $150 million to $450 million.
Interpublic is one of the world's leading advertising agencies and marketing services companies. Other key global brands include Draftfcb, FutureBrand, Golin Harris International, HUGE, Initiative, Jack Morton Worldwide, Lowe and Partners, MAGNAGLOBAL, McCann Erickson, Momentum, MRM Worldwide, Octagon, R/GA, UM and Weber Shandwick.