SAN FRANCISCO (Reuters) - Facebook has established a dual-class stock structure to ensure voting control by existing owners, but has no plans to become a public company, it said on Tuesday.
“We did introduce a dual class stock structure because existing shareholders wanted to maintain control over voting on certain issues, to help ensure the company can continue to focus on the long term to build a great business,” said Larry Yu, a Facebook spokesman. “Facebook has no plans to go public at this time.”
An analyst said he found the move unsurprising, because the social networking company has in some ways been modeling itself on Google, which long ago went to a dual-class structure.
“That is the exact same thing Google did,” said Ben Schachter of Broadpoint AmTech. “The structure is a way to protect longer term interests against short-term pressures.”
Schachter said that, without a dual-class structure, a majority of shareholders could force business decisions for short-term gains at the expense of the long-term success sought by the company’s founders.
The social networking company, which has signed up more than 300 million users, has large investments from the Microsoft Corp and from Russian investment company Digital Sky Technologies.
Last month, DST began purchasing shares directly from Facebook’s shareholders, two people familiar with the deal told Reuters at the time.
In July, DST purchased $100 million of Facebook shares from employees and ex-employees, at a $16.5 billion valuation.
Chief Executive Mark Zuckerberg said in May an IPO was “a few years out.”
Reporting by David Lawsky; editing by Andre Grenon