LinkedIn to raise $1B in share offering to finance expansion

Bloomberg

LinkedIn announced a follow on $1B offering of its common stock to help it expand. LinkedIn founder Reid Hoffman will continue to control about 59 percent of the company after the offering thanks to the company's dual class shares structure.

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LinkedIn, the world's biggest professional networking site, plans to raise $1 billion in a follow-on share sale it will use to finance product development, its sales operation and international expansion.
The funding round will result in the sale of $1 billion worth of its Class A stock, the company said in a statement. The underwriters will have the option to buy an addition $150 million in shares.
"LinkedIn intends to use the net proceeds of the offering primarily for general corporate purposes, including working capital, expansion of its product development and field sales organizations, international expansion, general administrative matters and for capital expenditures, including infrastructure," LinkedIn said.
LinkedIn, which offers online professional profiles, jobs searches and LinkedIn groups for networking, didn't rule out the possibility that some of that money could be used for acquisitions.
The company is in the middle of a period of rapid expansion, particularly in overseas markets, so raising additional capital makes sense as a way to give LinkedIn a way to make purchases without making its numbers less attractive to investors by putting a lot of costly reinvestment on the books.
Crucially, it's able to do an offering like this without diluting ownership of the company overly much — there's a separate class of stock for LinkedIn insiders with 10 times the voting power of the class A shares on offer, so this represents a loss of voting power for that bloc of less than 1 percent.
Based on the stock's Aug. 30 closing price of $240.04, the offering would increase the company's class A share count by 4.1 million for a total 97.7 million shares outstanding. There is about 18.3 million sharesoutstanding of Class B stock.