Facebook’s Latest Acquisition? That’s WhatsApp!


WhatsApp650After its unsuccessful bid for photo-messaging application Snapchat last November, reportedly valued at more than $ 3 billion, Facebook opened up the vaults and announced its acquisition of cross-platform mobile messaging company WhatsApp for $ 4 billion in cash and some $ 12 billion in Facebook shares, also announcing that WhatsApp Co-Founder and CEO Jan Koum will join Facebook’s board of directors.

Facebook said in its announcement of the deal that it would proceed in much the same way it did when it officially acquired Instagram in September 2012: The WhatsApp brand will be maintained, as will the company’s headquarters in Mountain View, Calif., and the WhatsApp apps will remain stand-alone, and not be combined with Facebook Messenger.

The social network also pointed out that WhatsApp boasts more than 450 million monthly active users, with 70 percent of them active on an average day, adding that the messaging volume of WhatsApp is approaching the worldwide volume of SMS (short messaging services, or text messages), and that WhatsApp is adding more than 1 million registered users every day.

Facebook Co-Founder and CEO Mark Zuckerberg said in the announcement:

WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable. 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.

Koum added:

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.

Under terms of the agreement between the two companies, all outstanding shares in WhatsApp and options to purchase shares in the company will be canceled in exchange for $ 4 billion in cash and 183,865,778 shares of Facebook class-A common stock, valued at approximately $ 12 billion based on the stock’s closing price Tuesday of $ 65.265 per share.

In addition, once the deal is closed, WhatsApp employees will receive 45,966,444 restricted stock units, and those RSUs are worth approximately $ 3 billion based on Facebook’s Feb. 18 closing price.

Should the merger agreement be terminated due to failure to obtain required regulatory approvals, Facebook will pay WhatsApp $ 1 billion in cash and issue the company $ 1 billion worth of Facebook class-A shares, based on the average closing price of the previous 10 trading days.

Readers: What does Facebook have in mind with the acquisition of WhatsApp?