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Facebook buying messaging app WhatsApp for $19B

Feb 19 2014, 5:41pm CST | by , in News | Technology News

Facebook buying messaging app WhatsApp for $19B
 
 

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Facebook buying messaging app WhatsApp for $19B

NEW YORK (AP) — Facebook is buying mobile messaging service WhatsApp for up to $19 billion in cash and stock, by far the company's largest acquisition.

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 will be restricted stock worth $19 billion that will vest over four years after the deal closes.

The deal translates to roughly 9 percent of Facebook's market value and is bigger than any acquisition made by Google, Apple or Microsoft.

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.

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.

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.

WhatsApp, a messaging service for smartphones, lets users chat with their phone contacts, both one-on-one and in groups. The service allows people to send texts, photos, videos and voice recordings over the Internet. It also lets users communicate with people overseas without incurring charges for pricey international texts and phone calls. It costs $1 per year and has no ads.

The deal is expected to close later this year.

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

__

AP Technology Writer Michael Liedtke in San Francisco and AP Business Writer Tali Arbel in New York contributed to this story.

Source: AP

 

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