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Facebook Signs Investment Deal with Russian Firm

Facebook on Tuesday confirmed a $200 million investment from Russian firm Digital Sky Technologies that values the company at $10 billion, which is exactly one third less than the valuation assigned to the social network after Microsoft's purchased 1.6% of the company in 2007. DST is buying $200 million in preferred stock, gaining a 1.96% stake in the company. The Russian firm also plans to buy at least $100 million of Facebook common stock, and in a deal that would let Facebook employees sell their shares in the company. This would let employees make money from their stock options without having to wait for the company to go public.

"Facebook has been growing in leaps and bounds in terms of users," said Jeremiah Owyang, an analyst at Forrester Research Inc. "It's been some time since they had a large injection of cash."

In fact, the Microsoft investment of $240 million in 2007, which valued the company at $15 billion, was Facebook's last cash injection. Zuckerberg noted that that value came at the peak of the market, which has changed considerably since. CEO Mark Zuckerberg described the current valuation as "fair." In a conference call announcing the deal, DST's Yuri Milner noted that, "Facebook has the potential to be one of the most valuable Internet companies globally."

Read the whole story at Bloomberg News »

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