‘Playboy’ Talk Could Affect Google’s IPO

NEW YORK A Playboy interview with Google founders Larry Page and Sergey Brin that hit newsstands this week could add a new wrinkle in the search company’s pending $3.3 billion initial public offering.

According to an amended prospectus filed with the Securities and Exchange Commission Friday, Google’s involvement in the story could have violated the Securities Act of 1933, namely quiet-period rules that restrict what a company can say leading up to an IPO.

If Google were held in violation of the Securities Act, the Mountain View, Calif.-based company could be required to repurchase the shares sold to buyers at the original offering price for a period of one year following the date of the infraction.

The disclosure is the latest bump on the search engine’s road to going public.

Earlier this week, the company agreed to issue 2.7 million shares with the potential value of more than $300 million to Yahoo! to settle a stock dispute and a patent infringement lawsuit; the company projected a non-cash charge of $260-290 million and a net loss in the third quarter as a result [IQ Daily Briefing, Aug. 10]. Last week, the company 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 [IQ Daily Briefing, Aug. 5].

Despite the hiccups, Google this morning opened the Internet-based auction to determine its stock’s initial price. Google and its stockholders plan to sell nearly 24.6 million shares in the company’s initial public offering for $108-135 per share. The IPO price is expected to be announced next week.

The Playboy article contained information derived from an interview with Page and Brin in April, prior to the company filing a registration statement. Google said it does not believe the article constituted a violation of the Securities Act.

Still, Google warned prospective investors that “the article presented certain statements about our company in isolation and did not disclose many of the related risks and uncertainties described in this prospectus. As a result, the article should not be considered in isolation and you should make your investment decision only after reading this entire prospectus carefully.”