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Facebook Snaps Up WhatsApp Mobile Messaging Service in $19bn Takeover Deal

iStock_000020200015XSmallFacebook has unveiled its largest acquisition to date, with the announcement that it has picked up the popular mobile messaging service WhatsApp in a takeover deal worth $19bn.

The social network giant has completed the deal with a buy-out comprising of cash and shares. WhatsApp will receive $12bn worth of shares in Facebook, along with $4bn cash. A further $3bn of additional shares will be paid out to WhatsApp executives at a later date.

WhatsApp was founded just over five years ago, and allows users to send texts and images to each other over a mobile network, avoiding SMS and MMS costs. The app now has over 400 million users around the world, and the company claims that new users are registering at a rate of a million per day. The app is particularly popular across Europe and Latin America, with a market penetration over 80 per cent in some countries.

Eyebrows have been raised at the incredibly large amount Facebook has shelled out for the takeover deal, especially as their market rivals Google made a $1bn bid for WhatsApp last year, a drop in the water compared to what Facebook has now paid.

Facebook founder and CEO Mark Zuckerberg said of the deal: “WhatsApp is on a path to connect one billion people. The services that reach that milestone are all incredibly valuable.”

Jan Koum, founder and CEO of WhatsApp, said: “WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide.”

Koum, who will also be joining the Facebook board of directors as part of the deal, added: “We’re excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world.”

It is no secret that Facebook is looking to strengthen the mobile side of its offering, with the company acquiring image-sharing site Instagram in 2012, and last year failed in a $3bn takeover bid of Snapchat, a mobile messaging app that erases files after a few seconds.

What do you think about the Facebook/WhatsApp deal? Will it give Facebook the push in the mobile market it needs, or will it be an expensive mistake from Zuckerberg?


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