Facebook Inc. plans to list its shares on the Nasdaq Stock Market, further cementing the exchange operator's position as the favored venue for the biggest U.S. technology companies, according to a person with knowledge of the matter.
The person declined to be named because the discussions are private. Facebook filed for a $5 billion initial public offering on Feb. 1. While the market capitalization of New York Stock Exchange shares is about triple the value of Nasdaq companies, the latter market operator has about twice as many technology corporations trading for more than $1 billion, according to data compiled by Bloomberg.
Exchange operators NYSE Euronext and Nasdaq OMX Group Inc., rivals for virtually every IPO in America, competed for what may be the biggest listing by a technology company. Winning the IPO means more fees, a boost in trading revenue and the chance to link an exchange's brand with the largest social-networking website in the world.
“There's cachet to winning one of the biggest IPOs ever,” Tim Hoyle, the director of research at Radnor, Pennsylvania-based Haverford Trust Co., which manages $6 billion including NYSE Euronext shares, said in a phone interview. “The straight-up value of this IPO will make for a nice gain in listing fees, which make up a meaningful portion of the revenue stream for exchanges.”
Robert Madden, a Nasdaq OMX spokesman, declined to comment on the decision. So did Jonathan Thaw of Facebook and Rich Adamonis of NYSE Euronext.
Nasdaq shares extended gains after the New York Times reported Facebook had picked Nasdaq, and rose 1.2 percent to $25.52 as of 4 p.m. in New York. NYSE Euronext fell 1.3 percent to $28.31 today.
Nasdaq OMX lists seven of the 10 biggest U.S. technology companies by market value, including Apple Inc. and Microsoft Corp., the two largest, as well as Google Inc. and Intel Corp. The NYSE is the home venue for International Business Machines Corp., ranked third.
Nasdaq OMX had more at stake because of the perception it gets all the technology companies, according to Sang Lee, managing partner at Boston-based Aite Group LLC. Among Internet IPOs since the beginning of 2011, LinkedIn Corp. and Pandora Inc. picked NYSE, while Nasdaq won Groupon Inc. and Zynga Inc.
“Having that brand name on that listings side would be huge,” Lee said of Facebook's selection. “If they're able to do it correctly, the other social-media sites and players would certainly be talking to Nasdaq initially,” he said. “It would certainly put them in a very nice position.”
Blow to Niederauer
The loss is another blow to Chief Executive Officer Duncan Niederauer, who saw his bid to merge with Deutsche Boerse AG fall apart this year when European antitrust regulators blocked the deal. Shares of the company slid 13 percent last year, while Nasdaq OMX climbed 3.3 percent and the Standard & Poor's 500 Index was little changed.
Robert Greifeld, the CEO of Nasdaq OMX, exacts a measure of payback after his unsolicited attempt to acquire the New York Stock Exchange parent fizzed out when the Justice Department said last May it would sue to block such a transaction. Niederauer was on the board that rejected Greifeld's offer and referred to it as “loosely worded and full of unanswered questions” in an interview with Bloomberg on April 10.
The decision by Facebook follows Bats Global Markets Inc., the third-largest U.S. exchange operator, withdrawing its IPO on March 23. Bats planned to compete with NYSE and Nasdaq in corporate listings, making its own shares the first to call the Bats BZX Exchange home. A computer bug prevented Bats from getting its own shares to trade.
Facebook, based in Menlo Park, California, filed Feb. 1 to raise $5 billion in the largest Internet IPO on record. The amount was a placeholder used to calculate fees and may change. The combined U.S. and German debut of Infineon Technologies AG in 2000 totaled about $5.85 billion, making it the biggest technology offering in history.
Facebook wants “their brand identity associated with Nasdaq, where the leading pioneers in technology have listed,” Philip Panaro, president and chief executive officer of IM2 Consulting LLC, said in a phone interview. He was an adviser to Nasdaq in the mid-1990s and to NYSE in 2004 and 2005. “NYSE is still the Big Board and Nasdaq has more technology companies.”
Bloomberg News
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