Facebook closes Instagram deal at US$715 million

Facebook closes Instagram deal at US$715 million

Summary: Facebook's acquisition of Instagram has become a reality, but thanks to the social network's tanking share price, the deal is worth less than three quarters of the billion dollars it was meant to be.


Facebook has closed its deal with Instagram, making the US$1 billion deal a reality.

The deal was previously meant to have been closed in the second quarter of the year, which would have netted Instagram a higher payout, due to the method of payment Facebook elected. At the time, the deal was for US$300 million and 23 million shares, and once Facebook went public, it entered the market at US$38.23 per share, increasing the total value of the deal to about US$1.18 billion.

According to Associated Press, the deal closed on Friday August 31, at which point Facebook's share price was US$18.06. This places the value of the deal at US$715.38 million. After trading resumed on Tuesday August 4 (as August 3 was a public holiday in the US), Facebook closed at its lowest point ever, at US$17.73 per share.

Instagram's team, which recently celebrated the 5 billionth photo shared through its photo app, will now move to Facebook's offices. It reassured its followers on its blog today that the "Instagram app and its features will stay the same one you know and love."

Facebook Vice-President of Engineering Mike Schroepfer welcomed Instagram, and reaffirmed that business would be as usual.

"Instagram will continue to serve its community, and we will help Instagram continue to grow by using Facebook's strong engineering team and infrastructure. We also can't wait to work with the talented Instagram team to improve the mobile experience," he said in a statement.

Topic: Social Enterprise

Michael Lee

About Michael Lee

A Sydney, Australia-based journalist, Michael Lee covers a gamut of news in the technology space including information security, state Government initiatives, and local startups.

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  • still stupid

    the amount of money for a simple app
  • not about the app

    it is more like they are paying for the brand, content and established traffics.
    still a huge sum though .... only time will tell if it is worthwhile
  • no money, no profit, ???

    So? Instagram claims umty-million billion users, for an app that is FREE.
    Just like Facebook. A free, time-wasting product that makes no money.
    Is Facebook hoping to gobble up a whole suite of free things that make no money,
    and then suddenly start charging all their users $1/month to keep using them or something?

    It would bring in big profits if it worked... that is, unless all the users say "buh bye" when it stops being free.