Facebook Agrees To Pay $16B For WhatsApp

Facebook shares are down in after-hours trading after it announced the startling stock and cash deal for the mobile messaging service — the biggest acquisition it has ever made. The companies say that the combo will help them “bring more connectivity and utility to the world by delivering core internet services efficiently and affordably.” Facebook CEO Mark Zuckerberg says WhatsApp “is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable.” Facebook plans to keep WhatsApp’s “core messaging product” and Facebook’s Messenger separate for now. “Here’s what will change for you, our users: nothing,” WhatsApp says in a blog post. Facebook also will maintain WhatsApp’s brand and keep its headquarters in Mountain View, CA. Co-founder and CEO Jan Koum will join Facebook’s board. The companies expect the deal to close later this year. If it doesn’t, then Facebook will have to pay a break-up fee of $1B in cash, and give WhatsApp $1B worth of its stock. The $16B price suggests that What’sApp is just $1.5B less valuable than Sony, based on its market cap, and more than twice as valuable as Gannett or Pandora. The purchase price consists of $4B in cash and $12B in Facebook shares. In addition, Facebook has agreed to give $3B in restricted stock units to WhatsApp’s founders and employees. They will vest over four years after the deal closes. This is believed to be the biggest deal yet for a start-up backed by a venture capital firm, Sequoia Capital. It says on a blog post that “WhatsApp has tapped into our insatiable appetite for personal communication. It is part of a chain that over the past 150 years reaches from the Pony Express, Telegraph and airmail letter to the telephone and email.” The messaging firm has just 32 engineers, and has an uptime of more than 99.9% “so users can rely on WhatsApp the way they depend on a dial-tone.”

Here’s the release: (more…)

This article was printed from https://deadline.com/2014/02/facebook-agrees-to-pay-16b-for-whatsapp-685984/