Meta Platforms (META) completed on October 29, 2026 an offering of 250 million depositary shares (certificates representing fractions of preferred shares), each equivalent to 1/20 of a Series A preferred share with a 6.50% annual dividend and mandatory conversion into Class A shares. The liquidation preference is $1,000 per preferred share. The underwriters are Morgan Stanley and Goldman Sachs, which were also granted an option to purchase up to 37.5 million additional depositary shares within 30 days, solely to cover any over-allotments.
Dividends are cumulative, may be paid in cash, in Class A shares or in a combination of the two, and are subject to declaration by the board of directors. Payments are made on February 15, May 15, August 15 and November 15 of each year, from February 15, 2027 to August 15, 2029. On that last date, each preferred share will be automatically converted into 1.3620 to 1.6000 Class A shares, which corresponds to 0.0681 to 0.0800 Class A share per depositary share. The range depends on the volume-weighted average price of Class A shares over 20 trading days, and standard anti-dilution adjustments apply.
As long as preferred shares remain outstanding, Meta may not declare or pay dividends on its common shares, or repurchase them, except for certain exceptions, unless the accumulated and unpaid dividends on the preferred shares have been paid or set aside.
In a parallel transaction, Meta entered into forward sale contracts with Morgan Stanley and Goldman Sachs, initially covering 40 million Class A shares. The shares were borrowed from third parties and sold to the underwriters, and Meta does not initially receive any proceeds. Settlement will occur on a date chosen by the company, no later than November 19, 2027, at an initial price of $622.91875 per share, subject to daily adjustments based on interest rates and to reductions on specific dates. The underwriters have an option to purchase an additional 6 million Class A shares within 30 days; if exercised, Meta intends to enter into additional forward contracts.
The contracts refer to a future Class C common share, provided for in the company's certificate of incorporation filed on October 21, 2026. Once issued and certain conditions are met, Meta may settle the contracts and convert the preferred shares into Class C shares as well. The amended and restated certificate of incorporation takes effect on January 19, 2027.
