Wade Law Group
offices Throughout california Call for a location near you
855-656-7590

California Clears Way for Facebook Acquisition of Instagram

Facebook was cleared by the state of California to issue stock for its purchase of Instagram. State officials declared the transaction was “fair, just and equitable” at the conclusion of a hearing in San Francisco before the Department of Corporations. The decision was expected.

The hearing was unusual but not for California. California is one of six states that allows for companies to seek permission to issue stock rather than dealing with the Securities and Exchange Commission.

Facebook agreed to buy popular mobile photo-sharing app Instagram in April for $300 million in cash and nearly 23 million Facebook shares. The shares were valued at $31, making the purchase worth at the time a cool $1 billion.

The transaction is no longer worth as much after Facebook’s bungled initial public stock offering in May. The social networking giant priced its shares at $38. Since then the shares have dropped below $20.

The deal drew huge headlines because the company was so young (launched in late 2010), has only 16 employees and, as Systrom acknowledged during Wednesday’s hearing, does not make any money. Asked how Instagram makes money, Systrom said: “That’s a great question. As of right now, we do not.” Systrom, like many in Silicon Valley, said he wasn’t focused on generating revenue, just on making “something that people really loved.”

But in the end, the company that had “defaulted” to remaining independent decided the Facebook acquisition was “the right thing to do for everyone involved” considering prevailing market conditions and competition from major players, Systrom said.

None of the details that emerged at the hearing were new. Facebook Chief Executive Mark Zuckerberg negotiated the deal over Easter weekend with Systrom. Systrom said Instagram had talked with potential acquirers big and small but never received a formal offer. The final valuation of Instagram before the Facebook deal was “just south” of $500 million at the end of March, Systrom said.

For information on California Business Law, contact a professional California Business Attorney. In the San Jose area or within California, call Amiel Wade at Wade Law Group at(888) 909-9430.

No Comments

Leave a comment
Comment Information

Call 408-842-1688 or toll free at 855-656-7590 or send a confidential email to request a case evaluation. Office locations located all throughout the state.

Get In Touch With Us Today

As litigation attorneys in San Jose, we have handled complex cases and obtained real results for individuals throughout the Bay Area and beyond.

Whether you are a business owner who needs help resolving a breach of contract dispute or a parent looking for skillful guidance regarding a custody dispute, let a skilled, successful team of attorneys help you.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Our Locations

San Jose Office
84 West Santa Clara Street
Suite 750
San Jose, CA 95113

Toll Free: 855-656-7590
Map & Directions

Mountain View Office
800 West El Camino Real
Suite 180
Mountain View, California 94040

Toll Free: 855-656-7590
Map & Directions

San Mateo Office
951 Mariners Island Blvd
Suite 300
San Mateo, California 94404

Toll Free: 855-656-7590
Map & Directions

Gilroy Office
8080 Santa Teresa
Suite 240
Gilroy, California 95020

Toll Free: 855-656-7590
Map & Directions

Oakland Office
1901 Harrison Street
Suite 1100
Oakland, California 94612

Toll Free: 855-656-7590
Map & Directions

Alameda Office
1101 Marina Village Parkway
Suite 201
Alameda, California 94501

Toll Free: 855-656-7590
Map & Directions

San Francisco Office
One Market, Spear Tower
36th Floor
San Francisco, California 94105

Toll Free: 855-656-7590
Map & Directions

San Francisco Office
1700 Montgomery Street
1st Floor
San Francisco, California 94111

Toll Free: 855-656-7590
Map & Directions

Alameda County Satellite Offices:
San Francisco County Satellite Offices:
Email Us For A Response

Visit Our Social Media Sites

Bold labels are required.