SEC query over Google auction

By THIS IS MONEY
Updated:

 

THE auction of shares in internet search engine Google began under a cloud today as the company admitted an interview with the firm's founders in the latest edition of Playboy magazine may have violated American listing rules.

Google admitted publication yesterday of an interview with Larry Page and Sergey Brin may have broken Securities and Exchange Commission rules demanding a 'quiet period' from companies ahead of floats.

The prospect of a breach of the listing rules means Google had to admit it could be forced to buy back for a year any shares it sells in the firm at the original purchase price.

Google said it would 'contest vigorously any claim that a violation of the Securities Act occurred' but corrected three elements of the Playboy story regarding its new Gmail messaging service, its number of staff and users.

Google's expects offers for its shares - available only to US residents or companies - to be between $108 and $135.

However, experts think the price may have to come down to around $100. A final price will be announced next week.

If the 25.7m shares on offer were priced at the midpoint $121.50, Google would be valued at $32.6bn (£17.8bn) and raise $3.1bn.

The Playboy article is the latest in series of difficulties surrounding the unconventional float. Critics argue that the auction, which has hugely eroded the fees Wall Street banks would normally get from a sale process, may overvalue the shares.

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