Google raises $4.2bn from share issue

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Google on Wednesday announced that it raised $4.18bn from a secondary share issue, which could be used as a war chest to fund acquisitions, just over a year after the initial public offering of Wall Street’s favourite internet stock.

Analaysts say that given Google’s strong balance sheet and significant cash generation, it is likely to invest in assets that will bolster its position in Asia, especially in China, where there is fierce rivalry among internet companies to claim a share of the growing fast-growing market.

Google already owns a stake in Baidu.com, the popular Chinese search engine. It has also hired Kai-Fu Lee, a former head of Microsoft’s operations in China and head of its research efforts into speech recognition technology, to join its research centre in Beijing.

Yahoo last month bought 40 per cent of the Chinese web property Alibaba for $1bn.

The new Google shares were priced at $295 after market close in New York, representing a small discount to the $303 closing price of Google’s Nasdaq shares.

In a Securities and Exchange Commission filing last month, Google said it anticipated it would use the net proceeds from the sale of 14.2m shares for general corporate purposes, including working capital and capital expenditures.

“In addition, we may use proceeds of this offering for acquisitions of complementary businesses, technologies or other assets,” it said.

Google’s stock debuted at $85 in August 2004 and peaked at Dollars 317.80 last month.

Morgan Stanley and Credit Suisse First Boston, which handled the Dutch auction for the IPO, were the bookrunners of the secondary issue, with Allen and Company as co-manager.

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