Facebook buys WhatsApp for 6 billion
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Facebook buys WhatsApp for $16 billion

Today it was announced that Facebook is buying WhatsApp for a whopping $16 billion. The SEC filing today reveals that WhatsApp will continue to operate as an independent entity under Facebook (much as Instagram did after their acquisition by Facebook), though the company claims that the deal will accelerate "Facebook's ability to bring connectivity and utility to the world." Facebook has long had their own messaging service in Facebook Messenger and it's not exactly clear how WhatsApp will complement that going forward.

Facebook is the world's largest social network with 1.23 billion users and growing, and CEO Mark Zuckerberg said that "WhatsApp is on the a path to connect 1 billion people. The service that reach that milestone are all incredibly valuable."

In a press release announcing the deal it was revealed that more than 450 million people use WhatsApp every month, 70% of whom are active on any given day. CEO and co-founder of WhatsApp Jan Koum will be joining the Facebook Board of Directors, though the WhatsApp team will remain at their current digs in Mountain View, California (not far from Facebook's place in Menlo Park.

Koum took the WhatsApp company blog in a preemptive move to assuage WhatsApp users that nothing about the service would change. He said that the current pricing structure and global availability will remain the same.

"There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product."

The deal consists of $12 billion in Facebook shares (that's 183.8 million shares) and $4 billion in cash. Another $3 billion in restricted Facebook shares for WhatsApp's founders and employees will vest over the next four years as a sort of retention bonus.

Press release:

Facebook to Acquire WhatsApp

  • Acquisition accelerates Facebook’s ability to bring connectivity and utility to the world
  • Leading mobile messaging company will continue to operate independently and retain its brand
  • WhatsApp co-founder and CEO Jan Koum to join Facebook Board of Directors

MENLO PARK, CALIF. – February 19, 2014 – Facebook today announced that it has reached a definitive agreement to acquire WhatsApp, a rapidly growing cross-platform mobile messaging company, for a total of approximately $16 billion, including $4 billion in cash and approximately $12 billion worth of Facebook shares. The agreement also provides for an additional $3 billion in restricted stock units to be granted to WhatsApp’s founders and employees that will vest over four years subsequent to closing.

WhatsApp has built a leading and rapidly growing real-time mobile messaging service, with:

  • Over 450 million people using the service each month;
  • 70% of those people active on a given day;
  • Messaging volume approaching the entire global telecom SMS volume; and
  • Continued strong growth, currently adding more than 1 million new registered users per day.

The acquisition supports Facebook and WhatsApp's shared mission to bring more connectivity and utility to the world by delivering core internet services efficiently and affordably. The combination will help accelerate growth and user engagement across both companies.

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

Facebook fosters an environment where independent-minded entrepreneurs can build companies, set their own direction and focus on growth while also benefiting from Facebook’s expertise, resources and scale. This approach is working well with Instagram, and WhatsApp will operate in this manner. WhatsApp’s brand will be maintained; its headquarters will remain in Mountain View, CA; Jan Koum will join Facebook’s Board of Directors; and WhatsApp’s core messaging product and Facebook’s existing Messenger app will continue to operate as standalone applications.

Upon closing of the deal, all outstanding shares of WhatsApp capital stock and options to purchase WhatsApp capital stock will be cancelled in exchange for $4 billion in cash and 183,865,778 shares of Facebook Class A common stock (worth $12 billion based on the average closing price of the six trading days preceding February 18, 2014 of $65.2650 per share). In addition, upon closing, Facebook will grant 45,966,444 restricted stock units to WhatsApp employees (worth $3 billion based on the average closing price of the six trading days preceding February 18, 2014 of $65.2650 per share). As of February 17, 2014, Facebook had 2,551,654,996 Class A and B shares outstanding plus approximately 139 million dilutive securities primarily consisting of unvested RSUs. The Class A common stock and RSUs issued to WhatsApp shareholders and employees upon closing will represent 7.9% of Facebook shares based on current shares and RSUs outstanding.

In the event of termination of the Merger Agreement under certain circumstances principally related to a failure to obtain required regulatory approvals, the Merger Agreement provides for Facebook to pay WhatsApp a fee of $1 billion in cash and to issue to WhatsApp a number of shares of Facebook’s Class A common stock equal to $1 billion based on the average closing price of the ten trading days preceding such termination date.

Facebook was advised by Allen & Company LLC and Weil, Gotshal & Manges LLP; and WhatsApp was advised by Morgan Stanley and Fenwick & West, LLP.

Webcast and Conference Call Information

Facebook will host a 30-minute conference call to discuss the acquisition at 3:00 pm PT / 6:00pm ET today. The dial-in number for the call is (866) 751-3284 (toll free) and (973) 935-8772 (international), conference ID: 2907041. The live webcast of the call can be accessed at the Facebook Investor Relations website at investor.fb.com. Facebook uses the website http://investor.fb.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Following the call, a replay will be available at the same website. A telephonic replay will be available for one week following the conference call at (855) 859-2056 or (404) 537-3406, conference ID 2907041.

Source: Facebook, WhatsApp

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Reader comments

Facebook buys WhatsApp for $16 billion

370 Comments

I believe so.  I realize Facebook has a ton of money but still. Most people have never even heard of Whatsapp. Oh well, its their money.  I dont use the app and certainly  never will now. I hate Facebook and trust them as much as I trust Google with my information.

Agreed with the trust. But so many people I know use either WA or Viber,. Actually, a lady at work was telling me she liked my phone and wanted a 1020. She asked for my opinion on WP, I advised that I loved it. She then asked if it has apps, like her S4. Yep, more than likely I said, although I advised her to look first before commuting. First app she mentioned was Whatsapp.

Oh ma god NSA, America, Google, Facebook, Twitter, USSR, Russia, Putin and Whatsapp they all care to need a piece of my very private information like knowing what pages I like on Facebook.

You are human. And presuming you a law abiding human, you are boring (sorry)

Banks and credit reference agencies and the tax men already knew the only really "interesting" / valuable bit about you, your finances. There is no value in your health status. No value on those p0rno sites you go to. No value in what religion you practice. Nothing.

The only thing valuable to those agenceis you seem to worry about, is whether you are a threat. This is what makes Snowden's position a bit weird. To govern humands and protect the law abiding agenceis need the information everyone seems to angry about.

Really, no one cares who you click on on Facebook. Why would a government spook?

If you start searching for home made b0mbs and Asian training camps then you rightly arouse suspicion.

ps. There is _nothing_ interesting on Twitter. Just delete it, its of no value to anyone.

(Bar 6 trillion Aron Kutcher fans who wait upon his every fart)

 

Now it is truly gone. Facebook will start digging msgs for targeted ads surely. Al phone numbers that appear on Fb and whatsapp will easily be for the same person.

Yeah, at least WhatsApp didn't have advertising, so there was no need to scrape your messages for keywords. If Facebook can find a reliable way of linking WhatsApp accounts to Facebook profiles (eg, logging into WhatsApp via Facebook) then you can be sure they will start data mining.

People use their phone numbers for text notification or text Facebook. Two phone numbers, two sources - bam! They wont need a genius for that. But can see Fb login being introduced very soon.

I though of that while writing my previous comment, but I don't know anyone on Facebook who actually keeps that number up to date (most don't enter it at all). Unless you're using 2FA or SMS updates, there's no incentive to keep it accurate.

Excuse my ignorance, but how did Whatsapp make money if there were no ads and no mined data? I thought the app was free, is that right?

It costs USD1 per year after the first year, but I have never been charged so I'm not sure. But you can tell by the ridiculous purchase price that both WhatsApp and Facebook know that there is a truckload of advertising money to be made from mining all the messaging data. I'm not being paranoid here; there's barely any other reason that Facebook would pay so much for it.

That thought is upsetting. So many msgs, photos, videos mined for exploiting Whatsapp's worth. But I think its more about what those many users can be subjected to in future that justifies the price than what whatsapp has now. Its armor is a phonebook with all the phone numbers.

Exactly. Even that Marc dude cannot make a $19b investment and not have to seek revenue and profit EXTREMELY aggressively.

Fees will go up, you will be forced to integrate from FB to Whatsapp and Whatsapp to FB, and I would not be surprised when ads do come into Whatsapp. They came even to Skype.

Guess the Zuck, I mean *uck will be pulling the wp what'sapp app soon since he didn't seem to care much about wp with instagram.

this is the most fucking annoying news ever... facebook was the last company that should have purchased whatsapp and it happened.. there goes our privacy.,,

hahahaha so true...second last... if it went to google... i would delete it instantly...now i m still thinking...personally i love Viber as they also have a PC client...but in India...every other person has Whats App and i have to use it for personal and business purpose...

And how many people who don't like this also use instagram which is owned by.......Facebook! Yet that doesn't seem to have made any difference. Total overreaction, if it was google I would agree with the negativity.

when facebok bought instagram and changed the policy..a lot of ppl dropped instagram.. including me.. it only when they changed back the polices people came back again...

 

whatsapp was ad free... and provacy concerns were 0 on that... not sure what the future will be..

I am bummed.  Not a fan of facebook.  Though I don't see how this could possibly benefit facebook, unless they start splattering their stupid ads all over whatsapp.  
 

Sam, do u know if voice messages can be retrieved from whatsapp and saved locally? I need to save some voice messages, after which I would cancel the account and uninstall the app.

Haha i wanted to do this before without a real reason, now i read your comment...i have the same reasoning as you i think

Seems dumb to me and I don't see how they are valued at that. It's like a spoiled kid throwing money around just because they can, hope it comes back to bite them in the ass.

Am bummed by the amount spent...its like whatsapp values a hell of a lot more than Nokia....kind of makes the Nokia DS purchase look like it was very much undervalued...

Well Facebook uses Bing search, that shows some signs. But honestly, when it comes to user privacy, all corporations seem fishy with their sniffing and snooping tactics. There is no limit to thier greed.. it just feels wrong.

Welcome to the era of social media and intermingling, begging for more chaos on planet. Social media (and SNA in general) is a mischievous solution to an unknown problem.

They should have already had a strong relationship with fb considering they invested 2m or 2b before it was popular

According to the current market cap for FB, it's worth at least $173 billion.  To buy them out, I don't seem them budging for less than $250 billion.  That's more than half of what Google's worth, so they can't afford FB.

I think it is time that Satya has a strong word with Skype team and order them to pull their fingers out...

I completely agree with this post.  I feel let down by Microsoft, at the beginning of the Skype purchase, there was so much promise, with Skype being baked into windows and windows phone operating system, yet nothing has been done with it.

I feel that Skype has stagnated. In fact  Skype is better on iOS and Android compared to the Windows phone 8 counterpart.  This is soooooooo Frustrating!!  Added to that the windows 8 metro app lack so much functionality its almost unusable when compared to the desktop option.

I am currently in Japan, hence why unfortunately I'm on android as Windows phone just isn't available here. I use an application called LINE and its incredible. It does the job of both Skype in terms of VOIP calling and messaging of whats app, with so much more functionality than both.  

I wish Microsoft could learn from this, they have gem on their hands yet are seem to have forgotten about it.

Here's to hoping.....

BTW even though I use an android for now.  Screw Google, Screw Facebook and I guess Screw Whatsapp too!

The theory at the time was that, Microsoft wasn't buying Skype for all the awesome potential integration.

They bought Skype to keep it out of Google's hands, as that deal would have been imminent.

From all evidence that we can see, I'm fairly certain that Microsoft *still* has no idea what to do with Skype, now that it owns it.   It was a fairly *expensive* game of keep-away.

You kniw I hadn't thought about it but it does make so much sense. Its still a shame there is just so much unrealised potential in this company, so frustrating.  

 

 Man I dream of a world where say, my xbox ones acts as my home server stroring all my documents, movies music all of it, accesible not only locally, but over the cloud also (maybe some form of skydrive integration for back up), where software was properly connect between my Surface, XBox, windows phone (when im back) and TV.

A world where the music app was actually good or maybe some kind of Media Center Revamp (have people forgotten what an amazing piece of software that was).

Where skype was actually integrated fully into micosoft windows phone Os so instead o making traditional calls it feels natureal and more effeicient making skype calls. Why would we need whats app or viber if we could have a fully baked in equivalent in skype. It could be how BBM was but infinately better....  

Such a great company, soooooo much pootential but damn execution is poor.  I think I may a proper article on the potential of microsoft.

Facebook is now ready for launching a Facebook phone. It has support for social needs, file sharing, chat, emails, Facebook apps and games.

I just hope Skype comes into it's own to replace all the functionality of Whatsapp, BBM, and the like.  It looks to be gearing up in that direction with this year's OS updates and how messaging will integrate into them.

Actually I don't give a damn. I use it and that's it. If Facebook wanna sell my information that would be cool!!!

i agree, regardless of where other messengers move, MS need to get skype to perform like whatsapp on the instant messaging front, right now the experience doesn't come anywhere close to that

Well that's me leaving whatsapp then.

its what Facebook do, either a buy a company who is 'threatening' them or make their own app.

Judging from FB's attitude on their own app and instagram, this is in no way good news for Windows Phone. I'm expecting an extremely fine-tuned iOS version, a nicely polished Android version, and then the WP8 version, just barely chugging along, getting features at least half a year later than the other two....=(

The Facebook app on windows phone was made by microsoft not Facebook that's thier crap Facebook is too lazy to fix that crap mess that Microsoft made when every body is mostly on IOS and android blame microsoftdont blame Facebook for that shit

Maybe if Facebook could get off their lazy asses and make the app themselves, we wouldn't have to worry about a weak app from Microsoft.

No. I like the Facebook app (Facebook Beta is what I'm using) on WP8 now, it's hugely improved from what we had when WP8 just launched. I respect Microsoft for their effort on this. 

However, the nicer apps on iOS and Androids are both developed by Facebook, not by Apple or Google or Samsung or whatever. Facebook doesn't give much shit about Windows Phone and MS has to put in extra effort just to be nearly the same as the other two. So no, I will continue to blame Facebook for this shit. 

I know. However as time goes on it will get continue to get updates, and with the current trend of company(ies) under FB, WP gets the least talent resources and often get very belated updates if at all, and that is what I'm worried about.

then Tesla will have special charging cables that no one else uses and then they'll change them every few years as well so you'll have to buy new ones :P

I know. This is all about current installmentbase. This isnt about know-how (whatsap isnt much better than the hundreds of alternatives). It's not about tangible resources either. It's unbelievabe that in the tech industry somones userbase could be worth so much. Facebook should know how easily things can change. In 3-4 years WhatsApp might be as worthless as Myspace.

 

Microsoft really made a killer deal though. I'm not sure if its best for Windows Phone but Nokia is a superb equipment designer and manufacturer. For Microsoft its all about the longterm. Paying 16 billion for Whatsapp, makes me wonder if Facebook will be able to stay relevant in the longterm.

A very unexpected news. I finished reading 1 manga's chapter and coming here to see this unexpected news. What a wow. .___.

What are you guys going on about? There are two messaging services I use: WhatsApp and Facebook Messenger. Now, the two will merge into one. Finally I'll be able to talk to WhatsApp contacts on my desktop. Besides, Microsoft has a lot of stocks in Facebook so essentially, WhatsApp becomes a little bit property of Microsoft as well. I'm super glad it's not Google.

And how has Mcrosofts (insignificant) shares paid off so far? Microsoft was allowed to build their own Facebook app. An app always a few steps behind the real ones Whatsapp as an independend company had committed resources to WP. This is bad for us.

 

Besides do you relly think Facebook will merge the two? Facebook seems perfectly fine with keeping things seperated. As long as there isn't any competition. They'll probably continue to swallow up any social media start up that becomes popular. With no particular use for their strategy at all. Besides not having to face competition. But that trick won't last forever. Microsoft could tell a story or two about that.

So an app... a fuckin' IM app just sold for 4+ times as much as an entire phone manufacturer???

Whiskey - Tango - Foxtrot...?!?!?

Indeed....its effin insane. Don't forget Nokia was not only a phone manufactures but a technology juggernaut. How a measley app company sold for that is outstanding and downright scary.

They just paid 4+ times as much as Lenovo paid for Motorola.

 

I swear I feel like I know so much less about business than I ever did before.  :-/

It's nothing more than a spoiled rich kid throwing money around because he can. Is it really unexpected considering there is a kid at the helm?

That three more Microsoft bought Nokia. Imagine Facebook buy Nokia and integrate all the Facebook service like events, map and other shit. I really need to have a start-up. $16 billion for an app I keep on mute every chance I get.

But they can always be better, so Microsoft it's time to step up your game and release some great Skype features and a better overall experience.

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