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Last Updated: Thursday, 30 March 2006, 06:18 GMT 07:18 UK
Google share sale to raise $2bn
Google is set to join the elite group of firms on the S&P index
Google has unveiled plans to raise up to $2bn (1.15bn) through the sale of a further 5.3 million shares.

The California-based internet search firm outlined its plans in a filing to the US Securities Commission.

The news also coincided with Google finalising the details of its $1bn strategic alliance with Time Warner's AOL unit.

Google unveiled its plans just two days before it is due to join Standard & Poor's index of 500 leading US shares.

Google said it expected to sell shares mainly to index funds who will have to own a stake in the firm when it joins the S&P 500.

If sold at Wednesday's closing price of $394.98, Google could raise as much as $2.1bn through its sale of extra shares.

However, shareholders fear Google's plan could mean the company will miss high earnings per share targets set by analysts. As a result, the group's shares slipped in after-hours trade.

Official documents it filed with US market watchdogs gave little information about why the group wanted to raise the extra cash.

Advertising expansion

The plans for the share sale were revealed as Google finalised the details of its tie-up with AOL, which was announced late last year.

Under the deal, Google will take a 5% stake in its biggest advertising partner in return for a $1bn investment to be made some time in the three months to the end of June.

AOL will also receive a $300m credit to advertise its products and services on Google, in return AOL is expected to sell more graphical adverts.

So far Google has mainly relied on adverts made up of a few words of text and a link.

In 2005, AOL accounted for about $550m, or 9%, of Google's total revenue.

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