Digital Transformation

Biggest buy yet! Facebook snaps up WhatsApp for a cool $19 billion

By Noel Young | Correspondent

February 19, 2014 | 3 min read

In its biggest acquisition so far, Facebook is buying WhatsApp, a messaging start-up, for $19bn in cash and stock.

The “eye-popping price” marks a new height in the frenzy to acquire popular technology start-ups, said the New York Times.

The deal further emphasises the social network's mobile push, said the Wall Street Journal.

Jan Koum: Honoured to partner with Facebook

WhatsApp allows users to send text messages free over the Internet, bypassing wireless carriers that may charge users to send messages over their networks. Texting apps, said the WSJ, are especially costing wireless carriers, which for years relied on the services for the bulk of their revenue.

Facebook will pay $4bn in cash and $12bn worth of Facebook shares for WhatsApp. An additional $3bn in restricted stock units will be granted to WhatsApp employees and founders. These units will vest over the next four years.

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

Referring to Jan Koum, WhatsApp co-founder and chief executive, Zuckerberg, said, “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."

WhatsApp, based in California, has more than 450 million monthly users, with 70 percent of those active on any day.

“WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide,”Koum said.

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“We’re excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world.”

If the merger is not completed, Facebook will pay WhatsApp $1bn in cash and $1bn in shares.

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