Facebook has reached a definitive agreement to acquire WhatsApp, for roughly $16 billion. The agreement also provides for an additional $3 billion in restricted stock units.
WhatsApp’s core messaging product and Facebook’s existing Messenger app will continue to operate as standalone applications. WhatsApp’s brand will be maintained, and users can continue to enjoy the service for a nominal fee, says Jan Koum, co-founder and CEO of WhatsApp. WhatsApp’s headquarters will remain in Mountain View, CA. Mr. Koum, will join Facebook’s board of directors.
Mark Zuckerberg (Founder and CEO, Facebook): WhatsApp is on a path to connect one billion people. The services that reach that milestone are all incredibly valuable.
Talking about integrating WhatsApp with Facebook, the social networking giant said in a statement, “Facebook fosters an environment where independent-minded entrepreneurs can build companies, set their own direction and focus on growth while also benefiting from Facebook’s expertise, resources and scale. This approach is working well with Instagram, and WhatsApp will operate in this manner.”
Jan Koum (Co-founder and CEO, WhatsApp): WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide.
A quick look at WhatsApp:
- Over 450 million people use the service each month;
- 70% of those people are active on a given day;
- Messaging volume approaching the entire global telecom SMS volume;
- Currently adds more than one million new registered users per day.
Terms of the Facebook-WhatsApp merger
The total price is roughly $16 billion, including $4 billion in cash and approximately $12 billion worth of Facebook shares. The agreement also provides for an additional $3 billion in restricted stock units to be granted to WhatsApp’s founders and employees that will vest over four years subsequent to closing.
In the event of a termination of the merger agreement under certain circumstances primarily related to regulatory approvals, Facebook will pay WhatsApp a fee of $1 billion in cash, as well as issue a number of shares of Facebook’s Class A common stock, equal to $1 billion based on the average closing price of the ten trading days preceding such termination date.
Facebook was advised by Allen & Company, and Weil, Gotshal & Manges. WhatsApp was advised by Morgan Stanley and Fenwick & West.
[Image courtesy: WhatsApp]