Social media giant Facebook will acquire mobile messaging company WhatsApp for 19 billion dollars in a cash and stock deal, the largest acquisition by the Mark Zuckerberg-led firm so far that will give it a stronghold in the market for messaging.
The whopping acquisition price includes USD 4 billion in cash, about USD 12 billion worth of Facebook shares and USD 3 billion in restricted stock units to be granted to WhatsApp’s founders and employees that will vest over four years following the closing of the deal.
Under the agreement, WhatsApp co-founder and CEO Jan Koum will join Facebook Board of Directors. Facebook said the acquisition will not impact the WhatsApp’s brand, which will be maintained and the company’s headquarters will remain in California’s Mountain View.
WhatsApp’s core messaging product and Facebook’s existing messenger app will continue to operate as standalone applications.
“WhatsApp is on a path to connect one billion people. The services that reach that milestone are all incredibly valuable,” Zuckerberg said. “I’ve known Jan for a long time and I’m excited to partner with him and his team to make the world more open and connected.”
WhatsApp, which will continue to operate independently, has built a leading and rapidly growing real- time mobile messaging service with over 450 million people using the service each month. Of this number, 70 per cent users are active on a given day.
The messaging volume of WhatsApp is approaching the entire global telecom SMS volume and the company is currently adding more than one million new registered users per day.
“WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide. We’re excited and honored to partner with Mark and Facebook as we continue to bring our product to more people around the world,” Koum added.
Koum co-founded WhatsApp in 2009 with Brian Acton, both former Yahoo executives. WhatsApp had received about USD 10 million in funding two years after it was founded.
Facebook’s most recent acquisition attempt failed when Zuckerberg tried to acquire SnapChat last year for a reported three billion dollars but SnapChat turned down the offer.
In a blog post, Koum said he would not have agreed to the partnership with Facebook if WhatsApp would have had to “compromise” on the core principles of the company. The deal would give WhatsApp the flexibility to grow and expand and noted that users of the service will not experience any change in usage.
“WhatsApp will remain autonomous and operate independently. You can continue to enjoy the service for a nominal fee. You can continue to use WhatsApp no matter where in the world you are, or what smartphone you’re using. And you can still count on absolutely no ads interrupting your communication,” he said.
In after-hours trading, shares of continued…
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