Facebook snaps up WhatsApp for $16B in user land-grab

Facebook snaps up WhatsApp for $16B in user land-grab

Summary: The mobile instant messenger will be snapped up for a mix of cash and stock, in a deal worth roughly $16 billion. Once again, a la Instagram, it's all about the user base.

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TOPICS: Mobility, Networking
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(Image: WhatsApp)

Another day, another major acquisition.

Except, $16 billion in a mix of stock and cash for WhatsApp, a mobile instant messenger program? The 55 employees at the Silicon Valley startup can say goodbye to your current neighborhoods...

WhatsApp confirmed "nothing" will change for its users in a blog post, published Wednesday. Facebook said it will keep the company as an independent operation within the social giant, suggesting that while Facebook integration may be pushed over time, the deal was nothing short of a land-grab for its user base.

An estimated 450 million people use WhatsApp each month, with 70 percent of those using it on any given day. That's a huge feat for any mobile-focused startup, almost matching Facebook's active user base ratio.

WhatsApp's user base is significantly larger than Twitter, based on its own initial public offering documents posted last year.

Screen Shot 2014-02-19 at 5.57.26 PM
(Image: WhatsApp/Facebook)

It wasn't so long ago Facebook bought Instagram for $1 billion in cash and stock. While the financial figure was far lower, Instagram remains relatively independent from the social giant, but added roughly 32 million users at the time. Now? It's significantly more.

Facebook confirmed the deal in a note on Wednesday, while its 8-K filing with the U.S. Securities and Exchange Commission dished out some of the details.

The deal will go ahead for $16 billion in total, made up of $12 billion worth of Facebook shares and $4 billion in cash. The agreement, the company says, offers an additional $3 billion in restricted stock to WhatsApp founders and employees that will vest for four years following the deal's closing.

WhatsApp founder Jan Koum, who will join Facebook's board, said he was "excited and honored" to partner with Facebook. Meanwhile, the social network's founder and chief executive Mark Zuckerberg shared the same sentiments.

Zuckerberg expanded in a post on his Facebook wall shortly after the news broke:

"WhatsApp will complement our existing chat and messaging services to provide new tools for our community. Facebook Messenger is widely used for chatting with your Facebook friends, and WhatsApp for communicating with all of your contacts and small groups of people. Since WhatsApp and Messenger serve such different and important uses, we will continue investing in both and making them each great products for everyone."

From the 8-K filing, the deal is expected to close later in 2014, with a pegged date of mid-August. The deal will also be subject to regulatory approval.

Topics: Mobility, Networking

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16 comments
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  • Say bye to privacy

    A huge number of people just had their privacy eroded even more. Facebook, Google, etc. are destroying privacy as we know it. This is why I'm such a strong advocate of privacy-based web services such as Ravetree, HushMail, DuckDuckGo, etc. You should definitely try out some of these sites if you haven't already. They're actually really good, and you don't have to worry about your personal information being data-mined.
    chrisp114
  • Pretty shrewd move

    The punditocracy had been fretting about how Facebook's demo tilts too old, and young folks were all on WhatsApp. Well, a few billion later, problem solved!
    Mac_PC_FenceSitter
    • Apart from

      the fact that many were using WhatsApp as a way not to be sucked into the Borg collective. Now that it belongs to the Borg, it seems many are scrambling for the lifepods.

      I sent my step-daughter a "welcome to Facebook" SMS this morning, I got the message back, that she and her friends were looking for an altenative.

      Several colleagues have also said they are busy getting their cliques to move to alternatives - Threema seems to be doing well out of this.
      wright_is
  • 16 billion !!

    Is it really worth 16 billion ? an unbelievable price tag
    Ben_rockwood
  • Bhahahaha....now I have to stop using WhatsApp.

    WhatsApp was successful because it was so simple and stupid...

    With Facebook jumping in, the privacy invasion begins...

    Goodbye WhatsApp...
    Owl:Net
    • Whiff of Desperation?

      This is a stupidly simple app that could be replicated by just about any startup. It's popular because it's NOT Facebook. And when the ads or FB integration start showing up, that's when people will switch to something else. This smells like a desperate attempt to keep the song going in the Tech Bubble 2.0 game of Musical Chairs. Throw billions at a trivial app to keep users in the fold, but I'm looking at the teacher, and she has her finger on the record player needle.
      g1131524
  • Don't use WhatsApp anymore...

    To recoup those 16 billion, Facebook have to sell you to various government and commercial organizations...think...think....think...
    Owl:Net
    • Alex, What is Microsoft

      “commercial organizations...think...think....think...”
      RickLively
      • Well

        Microsoft isn't free so the "selling" I supposed isn't worse than other "free" services like Facebook..
        Koymik
  • You can go back in time...

    ...but it'll cost you more than a suped up deLorean that runs on trash. Evidently $16Bil gets you back to the year 2000, and we all know how that Black Hole redefined the basics of gravity for the tech industry. This spending spree reminds me of other absolutely baseless expenditures (well, at least this one benefited a charity): http://www.youtube.com/watch?v=_jEvV5mXS8k
    rohannesian@...
  • Asian share

    Guess Facebook is really trying to get Asian consumers.

    Remember Facebook, whatapp, twitter and instagram are big but nothing close to wechat
    kingxxx70
  • Another angle to this...

    As everyone has been saying, there's a lot of reasons why this is unsurprising. But there's an intriguing angle to the story that isn't getting much coverage yet...

    http://prospectvisual.blogspot.co.uk/2014/02/facebook-and-whatsapp-theyve-always.html
    Kate_Smith6678
  • Scrambling

    I'm seeing a lot of people here, in Germany, scrambling to find an alternative to WhatsApp. They have a larger userbase in Germany than Facebook, but a lot of the people I have talked to today are looking for altneratives not tainted by Facebook.

    Threema seems to be becoming very popular.
    wright_is
    • Looking at the stats...

      in the German Play Store Threema has gone from 10,000 downloads yesterday to 4th place in the ranking for purchased app, overtaking Modern Combat 4, which has over 500,000 downloads. That is a lot of downloads for one morning!
      wright_is
  • expensive user info selling

    Everyday happier using HushHushApp, independent and secure, my info is not for sale!!
    Mumonkan
  • I think Facebook overpaid

    I heard a report on this on the radio today and I agree with Rob Enderle that the price tag was way too high. But I don't hold any FB stock, so it's not my problem (and if there are lawsuits, they're Mark Zuckerberg's problem). And it looks like we have some brand new instant billionaires that are very happy about the development.
    John L. Ries