Demand Media Prices IPO: Could Raise Almost $140 Million

richard rosenblatt demand media

Photo: Flickr/dfarber

Demand Media has priced its IPO in a new S-1 filing with the SEC, and now estimates the IPO could raise almost $140 million for Demand and its shareholders. (Via Kara Swisher.)Demand itself expects to raise about $60 million, and could be worth about $1.3 billion after the IPO. (Roughly 5X its 2010 revenue.)

Specifically, Demand Media is offering 4.5 million shares from the company and 3 million shares from current shareholders. And the underwriters — Goldman Sachs and Morgan Stanley — have the option to purchase up to another 1.125 million shares from both Demand and its selling stockholders, in what’s known as the “greenshoe.”

Demand estimates the IPO share price between $14 and $16 per share, which means at the high end of the range, the IPO could be worth almost $140 million.

Demand says, “We expect to receive net proceeds from this offering of approximately $58.1┬ámillion, based upon an assumed initial public offering price of $15.00 per share, which is the mid-point of the range set forth on the cover of this prospectus, and after deducting underwriting discounts and estimated offering expenses payable by us.”

As Kara Swisher notes, Demand also addresses the controversial accounting techniques it uses to recognise costs over 5 years, a longer period than is typical. It’s sticking with them, argues that it’s in the company’s best financial interest to so do, and says it will regularly review “the operating performance of content published.”

One big risk is Demand’s reliance on Google for traffic and “a significant portion” of its revenue. The word “Google” is listed 62 times in its S-1 filing.

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