Facebook snaps up Whatsapp in $19bn takeover
SOCIAL networking giant Facebook swooped on instant messaging service Whatsapp for an astonishing $19bn (£11.38bn) last night, in the firm’s biggest ever acquisition.
Facebook will pay $4bn in cash and $12bn in Facebook shares, as well as a further $3bn in restricted securities, which will vest over four years, to hold on to Whatsapp’s employees.
Facebook has also agreed to pay Whatsapp a $2bn break free – if the deal fails to get regulatory approval.
Whatsapp boasts 450m monthly users globally and 320m active users every day, suggesting that one in every 15 people in the world use the service.
Mark Zuckerberg, Facebook’s founder and chief executive, said that he thought Whatsapp could reach a billion users in the next few years.
At the end of last year, Whatsapp had only 50 people working at the firm, making the deal worth around $380m per employee.
Despite the small size of the team, Facebook said the growth of the messaging service is still robust, with around a million new users registering every day.
Whatsapp makes its money from the $0.99 a year fee it charges users.
Jan Koum, who co-founded Whatsapp and remains chief executive will join Facebook’s board, and the boards of both companies unanimously agreed to the deal.
“Whatsapp is on a path to connect 1 billion people. 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,” said Zuckerberg.
Whatsapp currently has no advertising revenue, and Koum insisted yesterday that this would still be the case after the deal, pledging not to “compromise on the core principles” of his firm. Zuckerberg added that he did not think advertising would be “the right way” to monetise the messaging service.
Speaking to investors after the announcement, both Koum and Zuckerberg insisted that the focus was not on driving revenue for Whatsapp, but continuing to increase the number of users.
Zuckerberg’s company has snapped up more than a dozen other smaller firms in the past year, splashing out on analytics, software and verification ventures in 2013.
Facebook’s share price dropped by over four per cent in after-hours trading following the announcement, but pared some of the losses later in the evening. The purchase is 19 times as large as Facebook’s previous biggest deal, dwarfing its $1bn purchase of Instagram in 2012.