Facebook buys WhatsApp for $16 billion
oday 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.
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