X-SciTech

Google Set To Bugle IPO

August 17, 2004 / 6:02 PM EDT / AP

In a sign that Google Inc.'s initial public offering is imminent, the Internet search company has asked federal regulators to give final approval to the paperwork required for its stock sale.

If the Securities and Exchange Commission approves, Google can close the auction that's determining the share price and notify successful bidders as early as 5 p.m. EDT Tuesday. If that happens, the company's stock could begin trading Wednesday on the Nasdaq Stock Market.

Though the timeline can change, it's expected Google will go public this week, ending a four-month saga that has included the unusual IPO auction, folksy letters embedded in regulatory filings, a Playboy magazine interview of its founders and the discovery that the company neglected to register 23 million shares.

Some of the problems that cropped up could continue to haunt Google. Just Monday, for instance, Google disclosed that the SEC has opened an informal inquiry into its failure to properly register the shares issued to employees and contractors.

There was no evidence the inquiry could delay the IPO. Google, which is in a so-called quiet period, is not commenting beyond its regulatory documents. SEC spokesman John Heine declined to comment on the nature of the probe.

Earlier this month, Google said it has offered to buy back the 23 million shares and 5.6 million options it had neglected to register. They were issued from September 2001 through July 2004, primarily to employees and consultants.

The buyback is expected to cost $25.9 million, including interest payments. The offer will be sent to 1,406 people, who could reject the buyback and sue the company.

The SEC's inquiry also could prove costly if it results in penalties. Moreover, several states also are asking questions about bungled stock issues, Google said.

"If it is determined that we offered securities without properly registering them under federal or state law, or securing an exemption from registration, regulators could impose monetary fines or other sanctions as provided under these laws," Google said in its filing.

If all goes as planned, Mountain View-based Google hopes to sell nearly 26 million shares for between $108 and $135 each, raising around $3 billion. It would place the company's market valuation just below rival Yahoo Inc. yet above McDonald's Corp. and Sony Corp.

Monday's request that the SEC give its final blessing to Google's registration is likely to be a formality. In fact, it has been working with regulators since its initial filing in April, amending the document and its prospectus several times in the process.

One of the more recent changes to its prospectus added the text — but no pictures — from an interview that ran in Playboy magazine. In it, co-founders Larry Page and Sergey Brin discussed the company. They were interviewed before Google filed its initial paperwork.

In the statement posted on its Web site Monday, Google asked that its registration be made effective at 4 p.m. EDT Tuesday and added that successful bids may be accepted as quickly as an hour afterward.

Google spokesman David Krane declined to comment further, citing the quiet period.