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Facebook to buy WhatsApp for $19 billion

February 19, 2014

Facebook has agreed to buy mobile messaging app WhatsApp for $19 billion, the two companies have announced. The social media giant will pay $4 billion in cash and approximately $12 billion in Facebook shares for WhatsApp. A further $3 billion will be paid to WhatsApp founders and employees in restricted shares.

Facebook founder Mark Zuckerberg has been in the market for a mobile messaging platform since last year when his company reportedly offered to buy Snapchat for $3 billion.  After that failed, he appears to have gone after WhatsApp — an older, more established and ultimately more expensive option. The deal is Facebook’s largest acquisition yet.

Over 450 million people use WhatsApp every month and the service adds more than 1 million new registered users every day, according to figures in a Facebook statement.  Of those 450 million monthly users, 70 percent are active on any given day, the statement reads.

WhatsApp will continue to operate independently following the deal and there is no plan to merge Facebook’s own messaging app with its new acquisition. WhatsApp’s founder and CEO Jan Koum will join the Facebook board of directors.

“WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide,” Koum said. Facebook’s Zuckerberg added that WhatsApp is on track to reach 1 billion people, and services that hit that milestone are “all incredibly valuable.”

The deal must first gain regulatory approval, but Facebook appears confident it will not fail at that hurdle, pledging to pay WhatsApp $1 billion in cash and another $1 billion in stock, should the acquisition fall through.

Allen & Company LLC and Weil, Gotshal & Manges LLP advised Facebook and Morgan Stanley and Fenwick & West advised WhatsApp on the deal.

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Filed Under: Finance, Internet, North America, Social, Staff Picks, Top Stories

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