Facebook to buy messaging startup WhatsApp for up to $19B
Related Blog Posts
- Analysts: Facebook takes out a threat in buying WhatsApp - but cost is 'staggering'
- Facebook 4Q revenue soars on mobile ads growth
- Snapchat doesn't like Facebook, reportedly says 'No' to $3B offer
- Mobile ads drive Facebook earnings
San Francisco — Facebook Inc., the world’s largest social network, agreed to acquire mobile-messaging startup WhatsApp Inc. for as much as $19 billion in cash and stock, seeking to expand its reach among users on mobile devices.
The purchase would be the biggest Internet deal since Time Warner’s $124 billion merger with AOL in 2001, according to data compiled by Bloomberg. The accord includes $12 billion in stock, $4 billion in cash and $3 billion in restricted shares, Facebook said today in a statement. WhatsApp has more than 450 million members, with 1 million users being added daily, Facebook said.
Google's biggest deal, Motorola Mobility, stood at $12.5 billion, while Microsoft's largest was Skype at $8.5 billion. Apple, meanwhile, hasn't done a deal above $1 billion.
- WRALTechWire coverage: Facebook paid "staggering cost" to take out a rival, one ananlyst says; others defend the deal.
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.
"Facebook seems to be in acknowledgement that people are using a lot of different apps to communicate," said eMarketer analyst Debra Aho Williamson.
Facebook says 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, which acquired photo-sharing service Instagram for about $700 million in 2012, is counting on applications beyond its main social network to reach more users on smartphones and tablets. WhatsApp competes with Snapchat Inc., which rebuffed a $3 billion offer from Facebook last year, as well as services from Twitter Inc. and Kik Interactive Inc.
Mountain View, California-based WhatsApp, which is popular in Europe, lets users send messages through its service on mobile devices based on different operating systems including Apple Inc.’s iOS, Google Inc.’s Android, Microsoft Corp.’s Windows Phone and BlackBerry Ltd.’s software.
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 path to reach a billion users.
"The services that reach that milestone are all incredibly valuable," Zuckerberg said.
Unlike traditional text messages, which consumers pay for through their mobile-phone plans, WhatsApp is free for the first year, and then costs 99 cents a year after that. It also competes with Tencent Holdings Ltd.’s WeChat in China, KakaoTalk in Korea and Line in Japan, as well as Facebook’s own application, Facebook Messenger.
The deal is the largest ever for Menlo Park, California- based Facebook, and prices WhatsApp at more than half of Twitter’s market value. Facebook shares fell as much as 5.7 percent to $64.18 in extended trading after the acquisition was announced. They rose 1.1 percent to $68.06 at the close in New York.
The deal is expected to close later this year
(The Associated Press and Bloomberg News contributed to this report).
Please Log In to add a comment.
Best of TechWire Insider
- No Ashton Kutcher smartphone, Lenovo says
- Checking in on 'tattooed guy' with SXSW-bound Raleigh team
- Sneak peek: Stylish HQRaleigh on eve of move-in day
- Raleigh mayor heads to Austin to recruit entrepreneurs, businesses
- Reports: Strike against IBM-Lenovo deal continues in China
- RTP misses out on $100M Cisco 'Internet of Everything' center
- IBM job protests in China don't generate sympathy in US
- Leadership lessons from the Red Hat tower: CEO stresses r-e-s-p-e-c-t
- Inside Lookout Capital's biggest deal: Why pick Wright Foods?
- Lenovo rips Ellen's Oscar selfie with a critical tweet, 'pic'