Facebook Inc. has announced that it will buy smartphone messaging company WhatsApp for $19 billion in cash and stock.
The 55-employee company operates a successful messaging service that has seen its number of users double in only the last nine months to 450 million monthly users. That makes WhatsApp more popular than Twitter, the microblogging service that has about 240 million users and is currently worth $30 billion.
The deal includes $12 billion in Facebook stock, $4 billion in cash and up to $3 billion in restricted Facebook stock units to be given to WhatsApp founders and employees over a four-year vesting period.
Besides making WhatsApp founders rich, the acquisition is also a homerun for Sequoia Capital, the only venture capital firm that funded WhatsApp. Sequoia put in about $60 million for a share valued at up to $3 billion in the deal.
Facebook's purchase easily blows any acquisition of a startup in recent history. Facebook bought Instagram in 2012 for $1 billion and the year before that Microsoft dropped $8.5 billion on video-calling company Skype. Facebook failed to buy up popular Snapchat last year when they offered $3 billion dollars.
WhatsApp built their company on the idea of offering instant messaging without the fees that carriers often charge. WhatsApp lets you send texts, photos and video to anyone else that has the program for free. WhatsApp also works on all major mobile phone operating systems.
WhatsApp says it will continue to operate independently, but no doubt it will only be a matter of time before we start seeing 'suggested' or 'sponsored' texts popping up.
Will Facebook improve WhatsApp or end up pushing users to LINE instead? Will Zuckerberg's plan for total digital world domination succeed? Our pictures and now our texts. What's next?
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