Facebook Buys WhatsApp in Whopping $19 Billion Deal

Facebook Buys WhatsApp in Whopping $19 Billion Deal

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In a statement, Facebook said it is buying WhatsApp for $4 billion in cash and $12 billion worth of Facebook shares. As part of the acquisition, WhatsApp founders and employees will get another $3 billion in Facebook stock that they can cash in after four years.

The massive deal appears to be Facebook’s biggest purchase yet. To put it in perspective, even without the $3 billion in Facebook stock that will vest after four years, the deal is 16 times what Facebook paid for photo-sharing site Instagram and more than five times what it offered to pay for messaging service Snapchat.

Both WhatsApp and the internal Facebook messaging system will live on as separate entities.

Connecting 1bn people

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

Currently, 450 million people use WhatsApp every month and the internet-based instant messaging service is adding 1 million users each day, according to the statement. What’s especially valuable is that seven in 10 WhatsApp users are active every single day.

High user engagement appealing

“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 honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world,” said Jan Koum, a co-founder and CEO of WhatsApp. The WhatsApp brand will live on, as will its headquarters in Mountain View.

 

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Facebook, which went public in May of 2012 in a fairly disastrous IPO, has ostracised some of its users in its effort to increase advertising revenues to please investors. Despite complaints, though, more users than ever are spending time on the site.

Facebook’s acquisition of WhatsApp comes just about a month after it snapped up social start-up Branch Media, a network that aims to help people connect around their interests.

What do you think of the Facebook/Whatsapp deal? 

Catherine Clifford
Catherine Clifford is a staff writer at Entrepreneur.com. Previously, she was the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Catherine attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. Email her at CClifford@entrepreneur.com. You can follow her on Twitter at @CatClifford.
  • Seen it all

    I’m afraid this article simply confirms the ‘myths’.

    Notice how the ‘opportunistic investors’ only crawl out the woodwork once all the hard work is done by yourself, and you’ve probably spent all your own money doing so.

    So then when the business is proven and the risk is almost zero, they will fight over themselves for a piece of the action. Sounds great hey?

    The bulk of startups in this country need seed capital. Unfortunately the applicants are poorly screened from a technical angle, as demonstrated by the litany of failed schemes described in news articles. This leads to onerous qualifying requirements for genuine newbies to get funding.