Google is plowing forward with its $3.5 billion initial public offering, saying yesterday that it would stop registering potential bidders tomorrow and start auctioning shares shortly.
The Mountain View, CA, search giant posted an announcement on its IPO registration Web site that it would stop registering users at 5 p.m. Eastern Daylight Time, Aug. 12. The site, www.ipo.google.com, distributes identification numbers to potential bidders, who must have a brokerage account with one of Google's 28 underwriters.
Google said the auction would “commence soon thereafter,” but it did not set a timetable for when investors could begin placing bids on the 25.7 million common shares available. Investors must bid on a minimum of five shares.
“It's fair to say the auction will be in process as of Friday,” said Scott Kessler, a stock analyst with Standard & Poor's, who is not participating in the auction and whose company has no relationship with Google.
Google can close the auction at any time. Kessler said he expects the auction to last no longer than two weeks.
Google's announcement signals that it intends to proceed swiftly with its stock offering despite hiccups in recent days, including an investigation by California state regulators over its improper registration of stock issued to insiders and negative comments on the stock offering from professional investors.
Google cleared a potential impediment to its future prospects this week by settling a long-running patent dispute with rival Overture Services. Overture sued Google in April 2002, alleging its keyword advertising system infringed on Overture's. Keyword advertising accounts for 98 percent of Google's sales.
Google agreed to issue Overture parent company Yahoo 2.7 million shares of stock worth up to $365 million to resolve the patent-infringement suit and a separate dispute over the number of Google shares Yahoo was allotted under a 4-year-old services agreement.
Many investors have publicly questioned Google's expectation that its shares will fetch $108 to $135 each. Standard & Poor's endorsed Google's valuation estimates Monday in a research report. The company pegged the value of Google's shares at $121 to $127. That price range would give Google a market value of $29 billion to $36 billion.
Kessler said he thinks much of the recent criticism of Google's stock offering has been overdone and that the company will steer the process to a successful conclusion.
“Notwithstanding all the challenges and all the criticisms … I'm supremely confident that this will be one of the most democratic IPOs in history,” he said.