Photo: By Justin Sullivan/Getty Images and IPG
The exact size of ad agency holding company Interpublic Group’s stake in Facebook has been one of the more interesting technical mysteries on Madison Avenue for months.It’s known that Interpublic took a 0.4 per cent stake in Facebook for just $5 million in 2006. It then sold half that stake for $133 million last year, before the Facebook IPO.
More recently, after both companies declined invitations to put some real numbers on the media rumours, I did some napkin maths and estimated the stake to be worth about $114 million, assuming a market cap of $57 billion back in early June.
Finally, Interpublic—which owns McCann Erickson, DraftFCB and Deutsch, among others—revealed in its most recent 10-Q that it owns 4.4 million shares of Facebook that on June 30 were worth $136 million. The company booked an “unrealized gain” of $134.8 million as comprehensive income.
Unfortunately, Interpublic’s disclosure assumes a stock price of about $30.90, and it’s fallen to $22.06 since then. That would make Interpublic’s current stake worth a mere $97 million today.
Why does IPG continue to hold on to this declining stake? (Selling it would create a huge gain that IPG sorely needs—its Q2 revenue declined 1.5% to $1.7 billion. The Facebook sum is the equivalent of a decent sized agency’s annual revenues.)
The answer, almost certainly, is that as long as IPG remains a significant shareholder of FB, its executives can get an audience with Facebook brass such as ad sales chief Carolyn Everson any time they want.
Disclosure: The author owns 30 shares of Facebook stock.
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