Facebook buy of Instagram 'probed by US regulators'

May 11, 2012
The hefty price Facebook paid for photo-sharing app Instagram qualified it for a review by the US Federal Trade Commission (FTC), which remained mum on the subject despite a Financial Times report on Thursday saying that a probe was underway. The investigation was considered routine given the price tag on the deal, but it could threaten the social network's plan for an IPO of stock next week.

Facebook's billion-dollar deal to buy the startup behind photo-sharing smartphone application Instagram has evidently caught the eye of US regulators.

The hefty price tag qualified it for a review by the US (FTC), which remained mum on the subject despite a Financial Times report on Thursday saying that a probe was underway.

A spokesman contacted by AFP said the California-based company would not comment on reports of a FTC probe of the Instagram acquisition.

The impetus of an FTC investigation was considered routine given the price tag on the deal, but such a probe could threaten to complicate the social network's plan for an (IPO) of stock next week.

"It takes 12 months to undergo review and the acquisition can't close until the FTC finishes," said independent analyst of Enderle Group in .

"Now Facebook has an open acquisition during an IPO and that could be a problem."

Takeovers under review by regulators tend to spook potential investors because of uncertainties regarding how they may play out.

Facebook last month announced a deal to buy the startup behind smartphone photo sharing application Instagram.

The big ticket purchase was seen by some as a move by Facebook to strengthen defenses against and blazingly hot newcomer Pinterest in the weeks ahead of what promises to be a history-making stock market debut.

Top executives at the world's leading social network this week kicked off their all-important road show on Wall Street -- an intense marketing drive ahead of the company's expected trading launch on the tech-heavy Nasdaq on May 18.

In a filing with the US , Facebook set a price range of $28 to $35 for its shares, which would value the firm at between $70 billion and $87.5 billion.

Based on the estimated market value, Facebook would rank behind Amazon and Cisco, each worth over $100 billion, but ahead of Hewlett-Packard ($48 billion) and struggling Yahoo! ($19 billion).

If all stock options that could be exercised in the next one to two years are taken into account, the value would rise to between $91 billion and $97 billion -- or up to 26 times the turnover Facebook posted in 2011.

Explore further: Yahoo profit surges on Alibaba divestment, mobile

add to favorites email to friend print save as pdf

Related Stories

Facebook buys mobile discovery startup Glancee

May 08, 2012

Mere weeks from a multi-billion-dollar debut on the stock market, Facebook has ramped up its focus on mobile lifestyles with the purchase of "social discovery" startup Glancee.

Facebook reports lower 1Q net income

Apr 23, 2012

(AP) -- Facebook's first-quarter net income fell 12 percent, weighed down by higher expenses even as its revenue soared, the social networking company said Monday, just a few weeks ahead of its expected initial public offering ...

Facebook secures $8 bn ahead of public offer

Mar 08, 2012

Facebook has secured $8 billion ahead of the social network's eagerly-anticipated initial public offering (IPO), according to documents provided to US regulators.

Facebook buys startup aimed at loyal shoppers

Apr 14, 2012

Facebook on Friday confirmed that it bought a San Francisco startup that helps merchants court shoppers with rewards for checking in with smartphones during visits.

Recommended for you

Turner channels removed from Dish amid pact spat

7 hours ago

Channels such as Cartoon Network and CNN are no longer part of Dish's programming lineup as a deadline has passed for the satellite TV provider and Turner Broadcasting to renew their distribution agreement.

Verizon reports higher 3Q net income, revenue

8 hours ago

Verizon Communications Inc. on Tuesday reported higher net income and revenue in its third quarter, helped by strong wireless subscriber growth and demand for its high-speed FiOS Internet services.

Amazon, Simon & Schuster sign book retail deal

16 hours ago

Amazon has reached a deal with American book publisher Simon & Schuster, the companies said, though the e-commerce giant remains at loggerheads with France's Hachette over e-book pricing.

User comments : 0