14 DAY TRIAL // Facebook has confirmed that it will accept the $200 million investment from Russian technology investment company Digital Sky Technologies. The $200 million will give the firm a 1.96 percent stake in Facebook thus valuating the social media company at $10 billion. Contrary to speculation though, the social networking site didn't have to give up a board seat for the investment.
“This investment demonstrates Facebook’s ongoing success at creating a global network for people to share and connect,” said the company’s CEO, Mark Zuckerberg. “We’ve worked hard to bring more than 200 million people – 70 percent outside of the U.S. – onto Facebook to share with friends, family and co-workers. A number of firms approached us, but DST stood out because of the global perspective they bring – backed up by the impressive growth and financial achievements of their Internet investments. We’re looking forward to working with the DST team.”
Facebook had a similar offer that valued the company at $8.5 million but it turned it down as it came with the requirement of having a board seat. Microsoft invested $240 million in 2007 for 1.6 percent, putting the social networking site at $15 billion. However, recent estimates, which were quite varied though, went as down as $2-3 billion. The Russian firm will also have the option to buy another 100 million dollar’s worth of common shares but that will be a separate transaction placing Facebook at a lower value, maybe at around $6.5 billion.
“Our investment experience in other regions reveals the tremendous value social networking companies create as they redefine how people communicate and interact,” said Yuri Milner, chief executive of DST. “By every important metric – user growth and engagement, technological innovation and financial performance – Facebook is on a similar trajectory, though on a much more global scale. We’re delighted to invest in Facebook, Mark and his management team as they make the world more open and connected.”
The investment will put Facebook in a better position to dominate the European market in which it is already the biggest social network. And, although it claims that it doesn't need any money, the $200 million should come in handy.