Facebook buys WhatsApp with a prominent deal

Facebook is buying mobile messaging service WhatsApp for $19 billion 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 Wednesday that it is paying $12 billion in Facebook stock and $4 billion in cash for WhatsApp. In addition, the app’s founders and employees — 55 in all — will be granted restricted stock worth $3 billion that will vest over four years after the deal closes.

The deal translates to roughly 9 percent of Facebook’s market value. In comparison, Google’s biggest deal, Motorola Mobility, stood at $12.5 billion, while Microsoft’s largest was Skype at $8.5 billion. Apple, meanwhile, has never done a deal above $1 billion.

Facebook likely prizes WhatsApp for its audience of teenagers and young adults who are 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.

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, including teenagers, interested. The company has said it will develop a “multi-app” strategy, creating its own applications that exist outside of Facebook and acquiring others.

Facebook said it is keeping WhatsApp as a separate service, just as it did with Instagram, which it bought for about $715.3 million in two years ago.

Facebook CEO Mark Zuckerberg says WhatsApp is on path to reach a billion users.

The deal is expected to close later this year.

Shares of Menlo Park, California-based Facebook slid $1.12 to $66.94 in extended trading after the deal was announced.

Reference : http://indianexpress.com/article/technology/technology-others/facebook-whatsapp-19b-deal/