Facebook announces $19bn WhatsApp deal
Facebook will buy fast-growing cellphone-messaging startup WhatsApp for $19-billion in cash and stock in a landmark deal that places the world's largest social network closer to the heart of cellphone communications and may bring younger users into the fold. The transaction involves $4-billion in cash, $12-billion in stock and $3-billion in restricted stock that vests over several years. The WhatsApp deal is worth more than Facebook raised in its own initial public offering and underscores the social network's determination to win the market for messaging. Founded by a Ukrainian immigrant who dropped out of college, Jan Koum, and a Stanford alumnus, Brian Acton, WhatsApp is a Silicon Valley startup fairy tale, rocketing to 450-million users in five years and adding another-million daily. "No one in the history of the world has ever done something like this," Facebook chief executive Mark Zuckerberg said on a conference call on Wednesday. Zuckerberg, who famously closed a $1-billion deal to buy photo-sharing service Instagram over a weekend in mid-2012, revealed on Wednesday that he proposed the tie-up over dinner with chief executive Koum just 10 days earlier, on the night of February 9. Strict functionality adherence
WhatsApp was the leader among a wave of smartphone-based messaging apps that are now sweeping across North America, Asia and Europe. Although WhatsApp has adhered strictly to its core functionality of mimicking SMSing, other apps, such as Line in Japan or Tencent Holdings's WeChat, offer games or even e-commerce on top of their popular messaging features. The deal provides Facebook entree to new users, including teens who eschew the mainstream social networks but prefer WhatsApp and rivals, which have exploded in size as private messaging takes off. "People are calling them 'Facebook Nevers'," said Jeremy Liew, a partner at Lightspeed and an early investor in Snapchat. How the service will pay for...
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