Mark Zuckerberg just dropped $4b in cash and $12b in Facebook shares to buy mobile messaging app WhatsApp.
Facebook have used their financial muscle to buy lots of smaller tech companies over the years but they have just handed over more than they ever have before to buy an app virtually everybody has on their phones, WhatsApp.
The mobile messaging service is hugely popular and a definite threat to Facebook Messenger so Zuckerberg and Co have gobbled it up for the eye-watering price of $16b.
When they bought Instagram, the fee was reported to be around $1b, so this is a massive outlay, even for a company as wealthy as Facebook.
Still, on the news of the purchase, Facebook's share price fell by 4.5 per cent.
In a statement tonight, Facebook explained the deal and confirmed that WhatsApp as we know it will continue.
The acquisition supports Facebook and WhatsApp's shared mission to bring more connectivity and utility to the world by delivering core internet services efficiently and affordably. The combination will help accelerate growth and user engagement across both companies.
"WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable," said Mark Zuckerberg, Facebook founder and CEO. "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."
Jan Koum, WhatsApp co-founder and CEO, said, “WhatsApp's extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide. We're excited and honored to partner with Mark and Facebook as we continue to bring our product to more people around the world.”
Facebook fosters an environment where independent-minded entrepreneurs can build companies, set their own direction and focus on growth while also benefiting from Facebook’s expertise, resources and scale. This approach is working well with Instagram, and WhatsApp will operate in this manner. WhatsApp’s brand will be maintained; its headquarters will remain in Mountain View, CA; Jan Koum will join Facebook’s Board of Directors; and WhatsApp’s core messaging product and Facebook’s existing Messenger app will continue to operate as standalone applications.
Check out the full statement
here.
Update: An extra $3b will be handed over by Facebook in restricted stock units to be grante to WhatsApp's founders and employees.
