Facebook is buying WhatsApp in a cash-and-stock deal worth up to $19bn, as the world’s leading social network enters the fast-growing chat app market that is popular among younger generations and emerging markets.
The Menlo Park-based social network is acquiring an app which boasts more than 450m users who use it to message without paying high fees. Users of the app send almost as many messages as the number of text messages sent over the entire global telecoms network.
he purchase – far larger than Facebook’s next largest deal of $1bn – is designed to achieve Facebook’s two main aims: to maintain its dominance in social networking as users move to mobile devices, and to grow its already massive userbase in less penetrated areas of the world.
WhatsApp is a leading player in the chat app world which has grown rapidly in the last couple of years. It is more dominant in countries outside the US, particularly in emerging markets.
The deal – which is 25 per cent in cash and the rest in stock – will see the app maintained as a separate entity, with its own headquarters. Jan Koum, WhatsApp’s co-founder and chief executive, will join the Facebook board.
The company shied away from the limelight, building the product in a “lean” way and only taking funding from one venture capital firm, Sequoia Capital.
Mark Zuckerberg, chief executive, first approached WhatsApp in the first half of 2012 but only began talking about the final deal a week and a half ago. He said the acquisition would help Facebook in its strategy to “connect everyone in the world”.
“WhatsApp is on a path to connect 1bn people. The services that reach that milestone are all incredibly valuable,” he 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.”
Under the terms of the deal, the owners of WhatsApp will receive Facebook shares worth about $12bn and $4bn in cash upfront, and $3bn in shares vesting over four years.
No comments:
Post a Comment