The U.S. Securities and Exchange Commission (SEC) on Wednesday gave its approval for Google Inc. to proceed with its initial public offering (IPO).
“Google has been granted its requested approval effective immediately,” said SEC spokeswoman Amy Best.
Now that the Mountain View, California, company’s registration statement has been declared effective — a day later than had been expected — Google can close its share auction inviting bids from potential investors and allow its underwriters to begin accepting some of those bids to start public trading.
Google representatives could not immediately be reached for comment.
Earlier on Wednesday, Google posted a notice on its IPO Web site that the offering price for shares will be in the range of US$85 to $95, down from the estimate of $108 to $135 originally cited in its IPO prospectus. On Thursday, Google confirmed in a statement it would sell the shares at $85 each.
Google, which will trade shares on the Nasdaq stock exchange under the ticker symbol “GOOG,” said it is hoping to raise about $1.3 billion from the sale of about 14.1 million shares. Along with lowering its opening share price, Google has hit a number of hurdles in its highly anticipated, yet rather unorthodox IPO bid.
The company drew the attention of SEC and California authorities when it revealed that certain U.S. securities laws may have been violated when Google issued unregistered shares to employees and consultants in the past. Though Google has offered to solve the problem by buying back the shares in question, at a potential cost of about $25.9 million, on Aug. 5 the company announced that informal inquires had been launched to look into the matter.
The informal inquiry is still continuing, the SEC spokeswoman said.
Another controversy centers on an interview Google’s founders granted to Playboy magazine in April, before the company filed its IPO registration papers with the SEC. The interview appeared in Playboy’s September issue, which came out this month, raising concerns that it might put the company in violation of the Securities Act of 1933, which bars company executives from discussing their company’s prospects as an IPO nears. Google has said it doesn’t think it has violated the law with the Playboy interview.
“The company has got a lot of publicity for what is an unorthodox way of raising money in the capital markets, and that plays well to its brand image as a pioneer,” said David Schatsky, a Jupiter Research analyst. “There’s been a lot written about (the IPO) glitches, but at the end of the day (the IPO) is only going to be good for consumers and other Google customers.”
“If being interviewed in Playboy is a mistake, it’s about the most benign mistake that a corporate executive has made in the last three years,” Schatsky added.
Of course, the ultimate purpose of taking the company public is to raise money, and Google has been tight-lipped about how it will use the money it raises from the IPO. In its IPO prospectus, Google, without being more specific, says it will use the money for general corporate purposes, such as sales and marketing expenses, research and development expenses and general and administrative expenses; capital expenditures; and possible acquisitions of businesses, technologies or other assets.
“The company has been extremely quiet about its strategic plans and how it intends to use the money that it’s raising, so it’s reasonable to expect there will be no immediate visible impact for either enterprise customers or consumers following this IPO,” Schatsky said. “Whatever changes they’re planning are probably already planned and scheduled and will proceed according to a pre-determined timeframe, but the offering itself won’t precipitate any noticeable changes, I would speculate.” All that remains is for the IPO process to be completed so that the market can finally see Google’s strategy unfold, he said.
Google should focus on exploiting the value of its assets, such as its technology platform, its infrastructure, its brand name, its intellectual property and the vast amount of traffic it generates as the most widely used search engine in the world, Schatsky said. “I think they would be wise to be selective about what they do. The world doesn’t need another portal, unless Google can provide the functionality in a way that benefits dramatically from its unique search capabilities,” he said. “The company is built on the strength of a small number of really good ideas.”