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.â€
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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