Looks like Facebook founder Mark Zuckerberg has something cooking up for Facebook users around the world.
Facebook is buying mobile messaging giant WhatsApp for $19 billion and its founder, Jan Koum, is now a part of Mark Zuckerberg's team as one of the board of directors of Facebook. But they are still keeping the messaging service independent from Facebook.
Yes people, the price is $19 billion: $4 billion in cash, about $12 billion in Facebook stock, and $3 billion in restricted shares, to pay out to WhatsApp employees over the next four years. For a five-year-old company with 50 employees, that translates into $380 million per person - and a heck of a haul for the start-up's venture investors, led by Sequoia Capital.
A termination fee is also attached to the deal that would cost Facebook $1 billion in cash and $1 billion in shares if the deal fails to pass regulatory muster.
WhatsApp makes a popular smartphone application that allows users of various devices, such as iPhones, BlackBerrys, and phones running Android, to send texts and photographs seamlessly and without paying the additional fees carriers charge for SMS messages. According to Facebook, the service has 450 million active users on any given day and is on track to connect 1 billion people.
The Facebook founder said in a Facebook post:
"WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable."WhatsApp had every option in the world, so I'm thrilled that they chose to work with us. I'm looking forward to what Facebook and WhatsApp can do together, and to developing great new mobile services that give people even more options for connecting. I've also known Jan for a long time, and I know that we both share the vision of making the world more open and connected. I'm particularly happy that Jan has agreed to join the Facebook board and partner with me to shape Facebook's future as well as WhatsApp's."
Facebook says that WhatsApp, like Instagram, will remain largely independent from the social network. The acquisition positions the company for even stronger growth on mobile phones, where advertising now makes up the majority of its revenue. It also strengthens its toehold in China: Facebook is blocked in the world's largest Internet market; WhatsApp and Instagram are permitted to operate there.
In a conference call after the deal was announced, Mr Zuckerburg called WhatsApp "an extremely high-quality product with incredibly strong engagement and rapid growth. It doesn't get as much attention in the U.S. as it deserves because it started out growing in Europe, India, and Latin America."
He further added:
"It's the only widely used app we've ever seen that has a higher rate of engagement than Facebook itself."
