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 made by Google, Microsoft or Apple.
The world’s biggest social networking company said Wednesday 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 cost is roughly 9 percent of Facebook’s market value. Google’s biggest deal, for Motorola Mobility, stood at $12.5 billion, while Microsoft’s largest was Skype at $8.5 billion. Apple has never surpassed $1 billion.
I am not surprised they went after WhatsApp, but the amount is staggering, Gartner analyst Brian Blau 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.
This is a bet on the future for Facebook, Blau said. They know they have to expand their business lines. WhatsApp is in the business of collecting people’s conversations, so Facebook is going to get some great data.
In that sense, 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 teens, interested. WhatsApp has more than 450 million monthly active users.
The company said it is keeping WhatsApp as a separate service, as it did with Instagram, which it bought for $715 million two years ago.