NEW YORK – Facebook is buying mobile messaging service WhatsApp for $19 billion in cash and stock, by far the company’s largest acquisition and bigger than any that Google, Microsoft or Apple have ever done.
The world’s biggest social networking company said Wednesday that it is paying $12 billion in Facebook stock and $4 billion in cash for WhatsApp. In addition, the app’s founders and employees – 55 in all – will be granted restricted stock worth $3 billion that will vest over four years after the deal closes.
The deal translates to roughly 11 percent of Facebook’s market value. In comparison, Google’s biggest deal, Motorola Mobility, stood at $12.5 billion, while Microsoft’s largest was Skype at $8.5 billion. Apple, meanwhile, has never done a deal above $1 billion.
The price stunned Gartner analyst Brian Blau. “I am not surprised they went after WhatsApp, but the amount is staggering,” he said.
Facebook likely prizes WhatsApp for its audience of teenagers and young adults who are increasingly using the service to engage in online conversations outside of Facebook, which has evolved into a more mainstream hangout inhabited by their parents, grandparents and even their bosses at work.
WhatsApp also has a broad global audience. Facebook CEO Mark Zuckerberg said the service “doesn’t get as much attention in the U.S. as it deserves because its community started off growing in Europe, India and Latin America. But WhatsApp is a very important and valuable worldwide communication network. In fact, WhatsApp is the only widely used app we’ve ever seen that has more engagement and a higher percent of people using it daily than Facebook itself.”
The acquisition makes sense for 10-year-old Facebook as it looks to attract its next billion users while keeping its existing 1.23 billion members, including teenagers, interested.
WhatsApp has more than 450 million monthly active users. In comparison, Twitter had 241 million users at the end of 2013. At $19 billion, Facebook is paying $42 per WhatsApp user in the deal.
WhatsApp, a messaging service for smartphones, lets users chat with their phone contacts, both one-on-one and in groups, over the Internet. It also lets users communicate with people overseas without incurring charges for pricey international texts and phone calls. It costs $1 per year and has no ads.