MENLO PARK, Calif. (AP) — Facebook and Chairman and CEO Mark Zuckerberg are selling a combined 70 million shares of Class A stock as the social media company prepares to join the Standard & Poor's 500 index.
The offering includes more than 41 million shares from Zuckerberg, who also will buy Class B shares that carry more voting weight. After a premarket stock dip of more than 4 percent on the news, Facebook's stock recovered somewhat and was down less than 1 percent in afternoon trading on Thursday.
The Menlo Park, Calif., company said Thursday that the Class A shares will be offered mainly to index funds whose portfolios are based on stocks included in the index. The S&P 500 will add Facebook on Friday after markets close. The index is a list of companies that have a market capitalization over $4 billion and is meant to be a snapshot of the U.S. economy.
At Wednesday's closing price of $55.57 per share, that would put the total value of the offering, not counting expenses, at about $3.89 billion. Zuckerberg's offering of 41.3 million shares would generate about $2.3 billion based on Wednesday's close, not counting expenses.
The company said Zuckerberg will use most of the proceeds from his sale of Class A shares to pay taxes he will incur in connection with exercising an option to buy 60 million shares of Class B stock. He's also using part of it for charitable contributions.