Facebook buying messaging app WhatsApp for $19B
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 nine per cent 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.
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 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, 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 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...not put all its eggs
in one basket.''
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