Facebook Inc (FB) Paid $22 Billion to Add WhatsApp to Its Ever-Growing Menu

As if to prove the truth behind the exponentially growing prices of Internet based commercial units, the news that created ripples the world over pertained to Facebook Inc (NASDAQ:FB) having completed its acquisition of WhatsApp for $22 billion. Although the deal had been initially cemented at $19 billion, the final value was higher by an additional $3 billion owing to the rise in Facebook’s stock value over the last few months.

It was in February, 2014 that the founders of the two companies, namely Mark Zuckerberg of Facebook Inc (NASDAQ:FB) and Jan Koum-Brian Acton of WhatsApp finalized the deal at former’s house with a bottle of Jonnie Walker scotch bearing testimony to details. Since then WhatsApp has continued to function independently but now that the deal has been closed, the service will be integrated into the administrative and legal framework of Facebook. Having been passed through regulatory channels, it was approval from European Union that brought the process to its conclusion.

Facebook (FB)

For Facebook Inc (NASDAQ:FB), this acquisition is the costliest so far since it has exceeded all the major mergers that have taken place over the last two years, namely Facebook acquiring Instagram for $1 billion in 2012 and Microsoft Corp taking over Skype for $8.5 billion. What renders this final figure awesome is that it surpasses the GDP of certain smaller countries like Iceland. This is itself is reason enough for the global social networking platform to employ this service in a way which is both lucrative as also in keeping with its global image.

Given the impressive figure of 600 million users per month that WhatsApp boasts of, Facebook Inc (NASDAQ:FB) can actually think of channeling its huge potential to create a worldwide money transfer service, a niche that it has been exploring lately. Reports since April 2013 have indicated that it has been trying to develop a money-related service which would facilitate transfer as also storage. Employment of David Marcus, Paypal’s CEO, and snapshots of infrastructure further strengthened the hope that something in this niche might be released soon.

Thanks to this deal, the two WhatsApp founders, namely Ukrainian-origin Jan Koum and American Brian Acton, also get to take home a large share of the pie. The former is a member of Facebook’s Board of Directors and while his annual salary stands at $1like that of CEO Mark Zuckerberg, he also owns restricted stock units worth almost $2 billion of the company. On his part, Acton would be receiving $3.5 billion subsequent to having paid the taxes.

Shareholders and employees of WhatsApp receive their fair share too as Facebook Inc (NASDAQ:FB) has set aside 178 million and 46 million of its own shares to be distributed amongst the two groups.  respectively.

This article has been written by Vinita Basu.

Related News:

“Facebook Inc (FB) Likely to Win EU Approval for Acquiring WhatsApp”

“Google Inc (GOOGL) Set to Release Own Mobile Chat Service like WhatsApp”

Read: The 10 Most Used Social Media Websites Today

Read: The 12 Most Expensive Apple (AAPL) Apps in the Market

Related posts


Warren Buffett's Best Picks

Warren Buffett's these stock picks will crush the market over the next 12 months. Get our report FREE by becoming a member now