According to TechCrunch, Facebook is purchasing messaging giant WhatsApp for $16 billion in cash and stock, according to a regulatory filing. The deal is being cut for $12 billion in Facebook shares, $4 billion in cash and an additional $3 billion in RSUs for employee retention.
A termination fee is attached to the deal that would cost Facebook $1 billion in cash and $1 billion in shares if the deal fails to pass regulatory muster.
Facebook has posted on its blog, detailing the reasoning behind the acquisition, as well. The post notes that WhatsApp will continue to operate independently and retain its brand. In addition, WhatsApp co-founder and CEO Jan Koum will join Facebook’s board.
[headlines headline=”h1, h2, h3, h4, h5, h6″ ] WhatsApp has only 32 employees, which means each of them is now valued at an average of half a billion. Remember when Facebook bought Instagram for $1 billion? Strangely, that seemed like a lot of money at the time for a picture app. Now it seems like a pittance! [/headlines]
Facebook notes that WhatsApp has over 450 million MAUs, with 70 percent of those active each day. In a staggering comparison, Facebook also notes that the messaging volume of WhatsApp approaches the SMS volume of the entire global telecom industry — and that it’s adding 1 million users a day.
The Rise of Whatsapp
Forbes Reports: Jan Koum picked a meaningful spot to sign the $19 billion deal to sell his company WhatsApp to Facebook earlier today. Koum, cofounder Brian Acton and venture capitalist Jim Goetz of Sequoia drove a few blocks from WhatsApp’s discreet headquarters in Mountain View to a disused white building across the railroad tracks, the former North County Social Services office where Koum, 37, once stood in line to collect food stamps. That’s where the three of them inked the agreement to sell their messaging phenom –which brought in a miniscule $20 million in revenue last year — to the world’s largest social Network.
“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 in a statement.
WhatsApp message volume growth is still accelerating. Has probably now overtaken SMS. pic.twitter.com/KsR85Mplrt
— Benedict Evans (@BenedictEvans) January 20, 2014
“WhatsApp had every option in the world,” Zuckerberg continued in a post to his Facebook page, “so I’m thrilled that they chose to work with us. I’m looking forward to what Facebook and WhatsApp can do together, and to developing great new mobile services that give people even more options for connecting. I’ve also known Jan for a long time, and I know that we both share the vision of making the world more open and connected. I’m particularly happy that Jan has agreed to join the Facebook board and partner with me to shape Facebook’s future as well as WhatsApp’s.”