LinkedIn has filed to raise more than $1 billion by selling stock in its company to both the public, and banks that will underwrite the issuance. $1 billion will be sold to common investors, and the banks participating in the deal have the option to buy up to 15 percent of the offered shares in addition, bringing the total capital infusion to a potential $1.15 billion.
In the listing, LinkedIn estimates that following the offering, its cash, equivalents, and short-term investments — colloquially just called cash by investors — will rise from $873.4 million to $1.85 billion. The second figure does not include the potential for the additional $150 million sale of stock to investment banks. In that case, LinkedIn would have essentially a flat $2 billion in cash.
The company does not need the money to fund its current operations. LinkedIn directly states: “Based on our current cash and cash equivalents balance together with cash generated from operations, we do not expect that we will have to utilize any of the net proceeds to us of this offering to fund our operations during the next 12 months.”
So, what will the funds be used for? Aside from increased staffing and product development, LinkedIn notes two efforts that make the raise itself quite sensical: infrastructure and acquisitions.
In the view of TechCrunch’s Ingrid Lunden — and I agree with her – the term “infrastructure” could indicate that LinkedIn has its eyes on a new data center, perhaps in Europe. The company states that international expansion is a target for its incoming monies.
That LinkedIn wants a larger checkbook with which to shop is not surprising. At its current cash tally, LinkedIn is incredibly under-gunned in the war to pick up the best new and upcoming firms. In an age when Microsoft, Facebook, Google, Apple and Yahoo (in a sense) have cash north of $10 billion, a piddling $873 million simply won’t cut it. I’m being slightly facetious, of course, but the point stands.
Is LinkedIn buried deep in a potential deal that requires it to raise cash now? Not according to what it told both the government and investors: “We may also use a portion of the net proceeds for the acquisition of, or investment in, technologies, solutions or businesses that complement our business, although we have no present commitments or agreements to enter into any acquisitions or investments.”
So, LinkedIn is reserving the right to buy whatever it damn well pleases, but isn’t yet in a dance too deep with any one firm. It’s a fine time for LinkedIn to raise the capital: It had a good recent quarter, and is trading more than twice its 52-week low. Shares in the company slipped in after-hours trading on the news, shedding around 2 percent.
Top Image Credit: Luz Bratcher