The New York Times is reporting this morning that Microsoft has bought a 1.6% stake in Facebook for $240m, this values the company at $15bn.
This values Mark Zuckerberg, Facebook’s 23 year old founder at $3bn and Accel Partners, the venture capital firm that invested $12.7 million in May 2005 now owns 11 percent of Facebook stock worth a cool $1.65 billion.
The deal must be a huge relief for Microsoft after the stories circulating yesterday that Google were about to beat them to the post (pun intended!) in buying a piece of Facebook.
This is a dream deal for Facebook as they yield only 1.6% of the company and still manage to scoop $240m.
What is in it for Microsoft? Well, on the one hand, as the New York Times reports:
As part of the deal, Microsoft will sell the banner ads appearing on Facebook outside of the United States, splitting the revenue with it. Last year, Microsoft struck a deal with Facebook to run banner ads on the site in the United States through 2011.
but, probably equally importantly, Microsoft has stymied Google’s plans to own advertising rights on Facebook.
Is Facebook really worth $15bn? Who knows. A company is worth as much as a buyer is willing to pay for it. Today, for whatever reason it is worth $15bn to Microsoft. Who knows what it will be worth next week.
5 thoughts on “Microsoft buys 1.6% of FaceBook for $240m”
It beggars belief. We’ll see in two years time whether it was worth it for Microsoft or a bad idea like eBay and Skype.
Paul, this is not like the Skype-Ebay deal.
For Microsoft, $240m is only pocket change. If it all goes pear shaped, they write it off and still make big profits.
“A billion here, a billion there… Pretty soon it starts to add up to some real money.”
Nick Carr has some good analysis (comments there are good too)
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