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Facebook spends $19 billion on WhatsApp

Zuckerberg hails “incredibly valuable” acquisition

Facebook has completed a $19 billion (£11.4 billion) deal for instant messaging service WhatsApp.

The social network has parted with $4 billion in cash and $12 billion in shares, while a further $3 billion will be given to WhatsApp’s founders and staff at a later date.

The agreement dwarfs Facebook’s $1 billion acquisition of Instagram in April 2012, which up until now had been its most expensive purchase. It also made a failed $3 billion attempt to take over Snapchat last year.

Analysts are suggesting that the move, along with its hefty price tag, signals Facebook’s intention to aggressively develop its mobile strategy.

It is also likely to have been attracted to WhatsApp’s young user base, with reports suggesting Facebook has been fading slightly with this demographic.

Facebook CEO Mark Zuckerberg welcomed the deal in an official statement, saying WhatsApp would continue to operate independently and was intended to complement the site’s existing messenger services.

The whole process has happened very quickly, with Zuckerberg suggesting preliminary discussions only took place 11 days before the deal was announced.

What the deal means for WhatsApp

WhatsApp co-founders Jan Koum and Brian Acton are expected to become billionaires as a result of the deal, while Mr Koum will also take up a seat on Facebook’s board of directors.

The company is thought to have around 50 employees, all of whom will be incorporated into Facebook. Zuckerberg has suggested that there are no plans to change WhatsApp’s interface, which is currently ad-free and charges users a “nominal” 99p annual fee.

However, some users are already expressing concerns that Facebook could seek to incorporate targeted advertising into WhatsApp at a later date, particularly as it needs to find a way to recoup its investment.

Others have put forward the theory that removing WhatsApp as a competitor is reason enough for Facebook to justify the $19 billion amount.

Kleon West, business development director at theEword, said: “This is clearly a hugely significant deal, and not just because of the numbers involved. Facebook has endured a bit of a rough ride recently, with plenty of speculation that its star was fading, so it will be very intriguing to see what it wants to do with WhatsApp.”

Written by James Riches

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