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Jan 04, 2011, 05.26 PM IST | Source: CNBC-TV18

Is Facebook worth $50 bn of investor's money?

New York Times chief M&A reporter and author of bestseller - Too Big to Fail, Andrew Ross Sorkin broke the news on this deal breaker. In an exclusive interview with CNBC-TV18s Menaka Doshi, discussed whether this deal is more than just a financial investment by Goldman Sachs.

Andrew Ross Sorkin, chief M&A reporter, New York Times

The first day of the year more than doubled Mark Zuckerberg's personal fortune, estimated at USD 7 billion. A USD 500 million investment by Goldman Sachs and a Russian investor has valued Zuckerberg's popular social networking site, Facebook, at USD 50 billion.

New York Times chief M&A reporter and author of bestseller - Too Big to Fail, Andrew Ross Sorkin broke the news on this deal breaker. In an exclusive interview with CNBC-TV18s Menaka Doshi, discussed whether this deal is more than just a financial investment by Goldman Sachs.

Below is a verbatim transcript. Also watch the accompanying video for more.

Q: It is a very big day for Facebook, USD 500 million investments and a valuation of USD 50 billion. That is quite some deal?

A: There are two big headlines here. One is this USD 50 billion valuation which is quite extraordinary for a company that only started a couple of years ago out of a dorm room at Harvard University. The second big headline here is that Goldman Sachs is the investor and what role it is going to play.

Ultimately, what this deal will mean for Goldman as they position themselves on Wall Street as part of the transaction. Not only is it investing in the company, it is also going to raise an additional USD 5 billion from its own high networth investors and its own clients. That is a big piece of it and whether Goldman will ultimately be able to lead a Facebook IPO. This is as much a financial investment for Goldman as is a strategic investment going forward.

Q: What is Facebook going to use this money for? How did this deal come about?

A: Some of the money will be used for employees, hiring, etc. It also maybe used to cash out some of the early investors. There are multiple parties to this. We are still trying to report out the entire process, but it sounds like Goldman Sachs came to Facebook, it wasnt that Facebook wanted this money. When someone arrives at your doorstep and says, we are going to value your company at USD 50 billion, it is hard to say no.

For the complete interview watch the accompnaying video...

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