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Thursday, 20 February 2014

Facebook Buys Whatsapp For $16B In Cash And Stock -

Facebook is purchasing messaging giant WhatsApp for$16B in cash and stock, according to aregulatory filing. The deal is being cut for$12B in Facebook shares, $4B in cash and an additional $3B in RSUs for employee retention.

A termination fee is attached to the deal that would cost Facebook $1B in cash and $1B in shares if the deal fails to pass regulatory muster.



Facebook hasposted on its blog, detailing the reasoning behind the acquisition as well. The post notes that WhatsApp will continue to operate independently and retain its brand. In addition,. WhatsApp co-founder and CEO Jan Koum will join Facebook’s board.

Facebook notes that WhatsApphas over 450M MAUs, with 70% of those active each day. In a staggering comparison, Facebook also notes that the messaging volume of WhatsApp approaches the SMSvolume of the entire global telecom industry — and that it’s adding 1M users a day.

WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” said Mark Zuckerberg, Facebook founderand CEO in a statement. “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."

Jan Koum, WhatsApp co-founder and CEO, said, “WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide."

Facebook specifically calls out its deal with Instagram as a template for how it will deal with WhatsApp: 

Facebook fosters an environment where independent-minded entrepreneurs can build companies, set their own direction and focus on growth while also benefiting from Facebook’sexpertise, resources and scale. This approach is working well with Instagram, and WhatsApp will operate in this manner. WhatsApp’s brandwill be maintained; its headquarters will remain in Mountain View, CA; Jan Koum will join Facebook’s Board of Directors; and WhatsApp’s core messaging product and Facebook’s existing Messenger app will continue to operate as standalone applications.

In a post on the WhatsApp blog,Koum elaborates on that:

Here’s what will change for you, our users: 

nothing. 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. There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product.

More to follow…

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