WhatsApp deal Facebook’s biggest ever at US$19b
UNITED STATES
FACEBOOK is buying mobile messaging service WhatsApp for US$19 billion (NZ$22.9b) in cash and stock, by far the company’s largest acquisition and bigger than any that Google, Microsoft or Apple have ever done.
The world’s biggest social networking company said yesterday that it is paying US$12b in Facebook stock and US$4b in cash for WhatsApp. In addition, the app’s founders and employees – 55 in all – will be granted restricted stock worth US$3b that will vest over four years after the deal closes.
The deal translates to roughly 9 per cent of Facebook’s market value. In comparison, Google’s biggest deal, Motorola Mobility, stood at US$12.5b, while Microsoft’s largest was Skype at US$8.5b. Apple, meanwhile, has never done a deal above US$1b.
The price stunned Gartner analyst Brian Blau. ‘‘I am not surprised they went after WhatsApp, but the amount is staggering,’’ he said.
Facebook likely prizes WhatsApp for its audience of teenagers and young adults who are
Analyst Brian Blau increasingly using the service to engage in online conversations outside of Facebook, which has evolved into a more mainstream hangout inhabited by their parents, grandparents and even their bosses at work.
‘‘This is a bet on the future for Facebook,’’ Blau said. ‘‘They know they have to expand their business lines. WhatsApp is in the business of collecting people’s conversations, so Facebook is going to get some great data.’’ In that sense, the acquisition makes sense for 10-year-old Facebook as it looks to attract its next billion users while keeping its existing 1.23 billion members interested. The company has said it will develop a ‘‘multiapp’’ strategy, creating its own applications that exist outside of Facebook and acquiring others.
‘‘Facebook seems to be in acknowledgement that people are using a lot of different apps to communicate,’’ said eMarketer analyst Debra Aho Williamson.
‘‘In order to continue to reach audiences, younger in particular, it needs to have a broader strategy.’’ Facebook said it is keeping WhatsApp as a separate service, just as it did with Instagram, which it bought for about US$715.3 million two years ago.
WhatsApp has more than 450 million monthly active users. In comparison, Twitter had 241 million users at the end of 2013.
Facebook CEO Mark Zuckerberg says WhatsApp is on a path to reach a billion users.
‘‘The services that reach that milestone are all incredibly valuable,’’ Zuckerberg said.
The deal is expected later this year.
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