IPG Sells Remaining Facebook Shares For $95M
Interpublic Group said today it sold the remaining investment it had in Facebook for $95 million. Last year, it sold half of its investment in the social network for a pre-tax profit of $132
While the proceeds of the sale of the second half of the stake indicate the decline in the value of Facebook stock since its public offering earlier this year, IPG did extremely well. Its initial 2006 investment was priced at $2.5 million, plus a commitment to purchase $10 million in ads on the network on behalf of clients.
Commenting on the sale, IPG CEO Michael Roth stated: “The value of the investment we made in Facebook in 2006 has increased significantly during the last six years. We decided to sell our remaining shares in Facebook as our investment was no longer strategic in nature.”
The company is waging a court battle with Ray Volpe, a former account executive at IPG, over the rights to profits on the company’s Facebook Investment. Volpe sued this summer in New York State Supreme Court, arguing that he is entitled to the entire profit.
Volpe contends that Roth agreed to a deal via email that gave Volpe and
Howard Draft, now executive chairman of Draftfcb, rights to all profits on the block of Facebook shares that IPG bought in 2006.
Volpe said IPG agreed to the deal because he and Draft agreed to personally guarantee that advertisers would buy the required $10 million in Facebook ads. IPG has denied it ever agreed to such a deal and has asked the court to dismiss the case. There has been no ruling so far.
Separately, Interpublic announced that its board of directors has authorized an increase in its existing share repurchase program from $300 million to $400 million. As of September 30, 2012, $151 million had been used under the authorization. The share repurchase program has no expiration date. “We view this as another opportunity to enhance shareholder value reflecting the confidence we have in our company,” Roth said of the additional buyback authorization.