Monday, August 20, 2012

Facebook Director Stock Sales Top $1B as Lock-Up Ends

Facebook Inc. director Peter Thiel sold most of his stake in the operator of the world’s largest social-networking website, bringing his divestment to date to more than $1 billion, after restrictions on insider sales ended. 

Thiel, one of Facebook’s earliest investors, sold about 20.1 million shares in the company on Aug. 16 and Aug. 17, raising $395.8 million, according to a filing with the U.S. Securities and Exchange Commission.

The sale, including $640.1 million in proceeds from the initial public offering, makes the venture capitalist and hedge- fund manager one of the biggest beneficiaries of Facebook’s rise. Concern that early investors, including Thiel -- who initially invested $500,000 in the fledgling startup in 2004 -- would sell holdings has been weighing on the stock.

Shares in Menlo Park, California-based Facebook, which are down by almost a half from the May 17 initial public offering, rose 5 percent to $20.01 at the close in New York today.

Facebook last week unlocked 271.1 million shares, the first of five insider-sale restrictions scheduled during the company’s first year as a public company. Another 1.44 billion shares will be freed up through November.

The share sales revealed today were tied to a trading plan adopted by Thiel on May 18, Facebook’s first day of trading, according to the regulatory filing. Thiel still holds more than 5 million shares. The reported proceeds don’t reflect underwriter or broker fees.

Jeremiah Hall, a spokesman for Thiel, and Ashley Zandy, a spokeswoman for Facebook, declined to comment.

The share sale, at prices from $19.27 to $20.69 a share, represents most of the 27.9 million shares Thiel still held.

Thiel freed up extra shares for sale when he converted more than 9 million shares to Class A from Class B, according to a document filed Aug. 10 with the U.S. Securities and Exchange Commission.

As a co-founder of PayPal Inc., he served as chief executive officer until the company was bought by EBay Inc. (EBAY) for $1.5 billion in 2002. Thiel, who’s also a member of the so- called “PayPal Mafia,” used his fortune to start hedge fund Clarium Capital Management LLC and to invest in startups.

One of those startups was Facebook, a social-networking service devoted to college campuses at the time of the investment in 2004. Thiel also participated in a $25 million funding round in 2006.

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