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    February 20, 2014

    Facebook buys WhatsApp for $19bn

    So what is the best way of staying ahead of your competitors? Buy them out! Facebook announced late yesterday that they will be purchasing messaging giant WhatsApp for a combined package of $19bn. The deal is structured to include $16 billion in cash and stock, of which $12 billion will take the form of Facebook shares, $4 billion in cash and an additional $3 billion in RSUs (restricted stock units) for the exclusive use of employee retention.

    Facebook stated on their blog that the messaging service will remain independent (like Instagram did after their acquisition), they also stated that WhatsApp co-founder and CEO Jan Koum will become a member of Facebook’s board. Facebook has certainly bought a booming company with over 450 million registered users of which about 70% are active each day. The amount of daily Whatsapp messages are rapidly approaching the same total as the entire daily global SMS volume. Whatsapp adds around 1 million users a day and is fast encroaching a 1 billion strong customer base.

    Mark Zuckerberg stated that: “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.”

    Jan Koum, WhatsApp co-founder and CEO, stated that: “œWhatsApp’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.“

    Should the regulatory authorities for some reason not approve this deal it would cost Facebook $1 billion in cash as well as $1bn in common Facbook stock (paid to WhatsApp). Hopefully the messaging giant will grow under the tutelage of their now social networking masters.

    Source: Facebook

    Follow Jaco on Twitter: @Jaco_vdWalt

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