Google Offers to Repurchase Shares

NEW YORK Google has offered to buy back 23.2 million shares of common stock and 5.6 million shares of unexercised options that may have been issued in violation of federal or state securities laws over a three-year period.

The rescission offer, divulged in an amended prospectus filed with the Securities and Exchange Commission yesterday, comes as the Mountain View, Calif.-based search company prepares to go public. It is unclear if this latest disclosure will affect the timing of its initial public offering, which is expected to happen as early as next week.

In the filing, Google said that certain shares issued to current and former employees and consultants from September 2001 through June 2004 were not registered under federal securities laws and certain option grants were not registered under state securities laws. Nor did the company seek to exempt these securities from the qualification requirements of the laws. Consequently, the stock issuances and option grants may have violated the Securities Act of 1933 and the securities laws of 18 states and the District of Columbia, the statement said.

Google said in the filing that it is unclear whether the rescission offer will terminate the company’s liability, if any, for failure to register or qualify the issuance of securities. Should the rescission be rejected, the company said it could continue to be liable for the purchase price of the shares and the value of the options up to an aggregate amount of $25.9 million, which includes interest.

If a shareholder does not accept the offer and the proposed IPO closes, according to the filing, the shares would be registered under the federal securities act and would be tradable once the rescission expires sometime in September.