Google is anticipating that the bidding process will reveal a clearing price for the shares of Class A common stock offered in the auction. The clearing price is the highest price at which all of the shares offered (including shares subject to the underwriters’ over-allotment option) may be sold to potential investors, based on bids in the master order book that have not been withdrawn or rejected at the time the auction is closed. Google intends to use the auction clearing price as the principal factor to determine the IPO price.Additional factors that will be used to determine Google’s IPO price will include: Google’s goal of setting an IPO price that results in the trading price of their Class A common stock not moving significantly up or down relative to the market in the days following the offering. The prices bid by professional investors. Google’s assets, including the current or expected financial performance or book value. Other established criteria of value.
Google will set the IPO price close or equal to the clearing price.However, Google and their underwriters have the ability to set an IPO price that is below the clearing price. Google’s IPO price may not necessarily bear a direct relationship to any one of the above factors, and could vary significantly from the initial public offering price. Therefore, only investors that are interested in investing for the long term and who are willing to take the risk that Google’s stock price may decline significantly, are encouraged to submit a bid for the IPO in the auction process.The pricing of the IPO will occur shortly after Google and their underwriters have closed the auction to new or revised bids.
Google will then issue a press release announcing the IPO price. This information will also be included in the final prospectus that is delivered to the purchasers of Class A common stock. The Allocation Process Once the IPO price has been determined, Google’s underwriters will begin the allocation process. All investors whose bids have been accepted will be eligible to receive an allocation of shares and a confirmation of their purchase in the IPO.All shares will be sold at the IPO price. The allocation process will not give any preference to successful bids based on the extent to which the bid price per share exceeds the initial public offering price. Investors that do not submit bids in the auction will not be eligible for an allocation of shares in the IPO.
One of Google’s objectives is to establish an IPO price that is equal or nearly equal to the auction clearing price. If this occurs, all successful bidders will be offered share allocations that are equal or nearly equal to the number of shares represented by their successful bids.Investors are expected to submit a bid that accurately represents the number of shares of Google’s Class A common stock that they are willing and prepared to purchase. Google and their underwriters may determine that bids that do not reflect the number of shares that the investor is willing to buy are manipulative and may therefore reject these bids entirely. In the event that the number of shares represented by successful bids exceeds the number of shares Google and the selling stockholders are offering, Google’s underwriters will allocate the offered shares across the successful bidder group.Google’s objective is to set an IPO price where successful bidders receive at least 80% of the shares that they bid for in the auction. The underwriters, in consultation with Google, expect to use either pro rata allocation or maximum share allocation to allocate shares.
Following the allocation process, Google’s underwriters will provide successful bidders with a final prospectus and confirmations that detail their purchases of shares of Google’s Class A common stock and the purchase price. These confirmations and the final prospectus will be delivered electronically.