Citing “intense media coverage,” Goldman Sachs said on Monday it was excluding US clients from a private offering of shares in Facebook expected to raise as much as US$1.5 billion.
“Goldman Sachs originally intended to conduct a private placement in the US and offshore to investors interested in Facebook,” the New York securities firm said in a statement.
Goldman said that the transaction has received heavy media attention in recent days and said “in light of this intense media coverage, Goldman Sachs has decided to proceed only with the offer to investors outside the US.”
“Goldman Sachs concluded that the level of media attention might not be consistent with the proper completion of a US private placement under US law,” it said.
US securities law bars public promotion of private offerings and the Facebook deal has already reportedly attracted the attention of the US Securities and Exchange Commission (SEC).
Goldman stressed that the decision to limit the offering to non-US offshore investors was “based on the sole judgment of Goldman Sachs and was not required or requested by any other party.”
“We regret the consequences of this decision, but Goldman Sachs believes this is the most prudent path to take,” Goldman said.
The Wall Street Journal, citing “people familiar with the situation,” said Goldman began notifying clients of its decision on Sunday in Asia, and clients in Europe and the US were being told on Monday.
The newspaper said a total of about US$7 billion in orders for Facebook shares has poured in, and that Chinese demand is especially strong.
Facebook has been in the spotlight since US media revealed that Goldman had invested US$450 million in the company, alongside a US$50 million investment by Russian firm Digital Sky Technologies.
The deal values the California-based Facebook at US$50 billion, more than companies with much larger revenue, like Time Warner.
The fast-growing social network, co-founded and headed by Mark Zuckerberg, has nearly 600 million members worldwide.
The New York Times described the withdrawal of the offer to US investors as a “major embarrassment” for Goldman.
The newspaper said it may “also deal a blow to Goldman’s relationship to Facebook and the firm’s prospects of leading the social network’s long-awaited initial public offering, expected in 2012.”
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