Thursday, 20 February 2014

Facebook to Buy WhatsApp for $16 Billion

Facebook has entered into an agreement to acquire WhatsApp, the popular messaging app, for $16 billion in cash and stock, according to a filing Wednesday.
The deal is by far Facebook’s largest acquisition to date and comes after rumors in late 2012 and early 2013 that Facebook and Google were vying to buy the messaging service.

“WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” Mark Zuckerberg, Facebook’s cofounder and CEO, said in a statement. “I’ve known Jan [Koum, WhatsApp cofounder] for a long time and I’m excited to partner with him and his team to make the world more open and connected.”
WhatsApp is the most popular of a set of mobile messaging apps that some argued posed a threat to Facebook’s business. The app lets users send messages for free across smartphone platforms and had proved particularly popular abroad and in emerging markets.
According to the filing, Facebook has agreed to pay $12 billion in stock and $4 billion in cash for the company. Facebook has also agreed to pay an additional $3 billion in restricted stock units to WhatsApp’s founders and employees as part of the deal, which would bring the total deal price to about $19 billion.
If the deal doesn’t go through, Facebook will pay a breakup fee of $1 billion to WhatsApp, which is still more than the total amount Facebook ended up paying to acquire Instagram.
Facebook stock declined by more than 4.5% in after hours trading following the announcement.
WhatsApp was founded by Koum and Brian Acton, two former Yahoo employees, in 2009. There are currently more than 450 million people who use the service each month, a larger user base than social networks like Twitter or LinkedIn.
Facebook has long been rumored to be looking to make a big acquisition in the messaging space, including a report that it offered to buy Snapchat for as much as $3 billion.
Koum, the cofounder and CEO, had repeatedly denied that the company was looking to be acquired. Then again, it’s not everyday you get offered $16 billion. As part of the deal, he will join Facebook’s board of directors.
WhatsApp will continue to operate independently, presumably in the same way as Instagram.
Is WhatsApp worth $16 billion?

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