Google founders to cut stake by selling $5.5 billion in stock. Sales would cut Brin, Page's voting power at Internet giant to less than 50%

Google Inc. co-founders Sergey Brin and Larry Page, who still own nearly one-fifth of the Internet giant, disclosed Friday that they intend to significantly reduce their stake by selling roughly $5.5 billion worth of stock over five years.

The sales are significant, because they would effectively eliminate Brin and Page's control of their company by cutting their collective voting power below 50%. Still, the 48% voting power that the co-founders' would retain following the sales nonetheless constitutes a formidable position of influence.

In a regulatory filing with the Securities & Exchange Commission, Brin and Page, who started Google /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 550.01, -32.97, -5.66%) as graduate students at Stanford University, disclosed that under a five-year "diversification plan" adopted in November, they'll be selling 5 million shares each.

Brin and Page currently own roughly 57.7 million shares of common stock in Google, or about 18% of its outstanding capital stock. Their diversification plan is intended "to allow Larry and Sergey to sell a portion of their Google stock over time as part of their respective long-term strategies for individual asset diversification and liquidity," according to the regulatory filing.

At Google's closing stock price of $550.01 on Friday, the co-founders' sale of stock would result in proceeds of roughly $2.75 billion each.

Brin and Page have maintained significant ownership stakes in Google, while also relying on a dual-class stock structure at the company that currently grants them about 59% of the voting power of the company's outstanding capital stock.

After their planned five years of stock sales, their voting power would be reduced to roughly 48%, according to the regulatory filing.

Google shares dipped $6.47 to $545.25 in after-hours trading.

The search giant's stock price has been on a wild ride over the past two years, veering toward $250 in late 2008, before mounting a steady recovery throughout 2009.

Early last year, Google took the unusual step of In a regulatory filing with the Securities & Exchange Commission, Brin and Page, who started Google /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 550.01, -32.97, -5.66%) as graduate students at Stanford University, disclosed that under a five-year "diversification plan" adopted in November, they'll be selling 5 million shares each.

Brin and Page currently own roughly 57.7 million shares of common stock in Google, or about 18% of its outstanding capital stock. Their diversification plan is intended "to allow Larry and Sergey to sell a portion of their Google stock over time as part of their respective long-term strategies for individual asset diversification and liquidity," according to the regulatory filing.

At Google's closing stock price of $550.01 on Friday, the co-founders' sale of stock would result in proceeds of roughly $2.75 billion each.

Brin and Page have maintained significant ownership stakes in Google, while also relying on a dual-class stock structure at the company that currently grants them about 59% of the voting power of the company's outstanding capital stock.

After their planned five years of stock sales, their voting power would be reduced to roughly 48%, according to the regulatory filing.

Google shares dipped $6.47 to $545.25 in after-hours trading.

The search giant's stock price has been on a wild ride over the past two years, veering toward $250 in late 2008, before mounting a steady recovery throughout 2009.

Early last year, Google took the unusual step of resetting stock options for employees at lower prices, making it easier for them to cash in on their equity. for employees at lower prices, making it easier for them to cash in on their equity.

(from MarketWatch, January 22, 2010)

Showdown At The VC Corral

A recent amendment to pending legislation that would regulate private firms has the buyout and venture arms of the private equity industry at odds with each other.

That was clear at a hearing by the House Committee on Financial Services Tuesday, as representatives of the buyout, venture, and hedge fund industries passed judgment on a recently issued revised version of the legislation, released by Congressman Paul Kanjorski (D-Pa.).

The bill originally would have regulated all sorts of private funds by requiring them to register with the Securities and Exchange Commission, but the revision exempts venture firms. Doug Lowenstein, president of the Private Equity Council and James Chanos, chairman of the Coalition of Private Investment Companies, both said the exemption could be a mistake as written. The Private Equity Council, which represents only the largest buyout firms, has previously supported the registration requirement.

“I think it will prove very difficult to define a venture capital approach,” said Lowenstein, who instead proposed that Congress simply raise the threshold of assets under management required for SEC registration from the $30 million minimum currently set by the bill.

Lowenstein added that small private equity firms would suffer just as much under the proposed legislation as venture firms would. “That’s why the touchstone…[shouldn’t be] what you say you are. It’s the size of what you do and whether you create systemic risk,” he said.

Chanos, who is also founder of New York-based hedge fund Kynikos Associates, also questioned the merits of exempting a specific class of firms solely on the basis of a “self proclaimed investment thesis.”

“It’s an invitation to the growth of bubbles and fraud,” Chanos said.

Terry McGuire, chairman of the National Venture Capital Association, which lobbied vigorously for a venture exemption, defended the revision. He said that coming up with a definition for a venture firm would be relatively easy by using the U.S. Treasury’s suggestions for defining systemic risk by assessing use of leverage, trading risk and counterparty risk.

McGuire also appeared to take aim at the Private Equity Council’s broad support of SEC registration. “We have never taken a position that registration would work for our industry,” he said.

View the prepared testimony of all the participants at the hearing here.

(from blogs.wsj.com, October 6, 2009)