Google sells US$4.18bln in stock, a recent record

SAN FRANCISCO (Reuters) - Web search leader Google's follow-on stock offering priced at US$295 per share, raising US$4.18 billion in the largest US high-tech secondary sale in nearly a decade, underwriters said on Wednesday.

Google went public in August 2004 and announced the follow-on offering in a regulatory filing last month. It had previously said it expected US$4.11 billion in net proceeds from a shelf offering of 14.16 million Class A shares.

The share offering is the largest US high-tech secondary offering since at least 1996 and the largest overall since a follow-on stock sale by investment bank Goldman Sachs that drew US$4.51 billion in 2000, according to tracking firm Dealogic.

Google shares came to market in August 2004 at US$85 and touched a record high of US$317.80 in July.

Sparking interest in the stock sale are the enormous gains reaped by shareholders who took part in the initial public offering. The scarcity of the company's shares compared with other new IPOs helped to fuel demand.

The US$4.18 billion in gross proceeds, combined with the nearly US$3 billion in cash and marketable securities on hand at 30 June 2005, amount to a US$7 billion fund Google can draw upon for anything from acquisitions to research and development.

Google has said it will use proceeds from the offering for general corporate purposes, including working capital, capital expenditures and acquisitions of complementary businesses, technologies or other assets.

With speculation rampant over the web search leader's next moves, internet pundits have argued the offering could be used as a war chest to enter markets ranging from internet video search to a free, ad-supported US wireless network.

Many brokerage analysts have taken a more conservative view, arguing that while Google may use the US$4 billion cash pile to fund investments in existing operations, any acquisitions are likely to be for small technology firms.

The Wall Street debate is coloured by the fact that half the analysts who follow Google are restrained from discussing the offering because the firms they work for are underwriters.

In its regulatory filings, Google has sought to dispel the notion that a major merger could be in the works. "We have no current agreements or commitments with respect to any material acquisitions," Google underscored in a filing last week.

Underlying the debate are investor jitters over whether Google must drum up new growth opportunities as revenue growth from advertising dollars -- accounting for virtually all its current sales -- may slow amid fierce competition from rivals including Yahoo and Microsoft.

The follow-on is expected to go to the market on Thursday, underwriters said.

CSFB and Morgan Stanley are lead underwriters. Allen & Co is also a lead underwriter, with 17 other co-managers involved in the deal, according to a US Securities and Exchange Commission filing.

Google had said total proceeds in prior regulatory filings could reach US$4.29 billion if underwriters exercise their over-allotment option to buy an additional 600,000 shares.

Additional reporting by Duncan Martell in San Francisco, Paul Thomasch in New York and Alistair MacDonald in London.

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