Google Inc.’s initial public offering Thursday proved to be a big windfall for Time Warner Inc.
Although the IPO price was lower than first expected -- $85, as opposed to the $108-$135 per share originally predicted -- Google shares surged in their first day of trading, closing at $100.34 each (up 18%, or $15.34) Thursday. The shares traded as high as $104.66 that same day.
Google sold 19.6 million shares to the public, raising $1.67 billion. With 271.2 million shares outstanding, the company has a market capitalization of about $27.2 billion.
Time Warner -- which owns 7.4 million class-D warrants that were immediately convertible into the same number of class-B shares during the IPO -- sold 927,952 class-A shares Thursday (the class-B shares are immediately convertible to class-A shares upon sale). That brought the media giant about $76.7 million at $82.62 per share (the $85 share price minus underwriter discounts and commissions).
Time Warner also has the option of selling another 1.43 million shares of Google stock for the same price (worth $117.9 million) if the underwriters exercise their overallotments. The remaining 5.08 million shares Time Warner would hold are worth about $509.9 million based on Thursday’s closing price.
Time Warner acquired the Google warrants through is America Online Inc. unit for about $2.95 per share.