Facebook is shopping for obtain aggressive mobile-messaging startup WhatsApp for $19 billion in money and stock, because the world's largest social network appearance for tactics to spice up its quality, particularly among a younger crowd.
The acquisition of the new electronic communication service with over 450 million users round the world shocked several geographical area observers with its lofty tag. however it underscores Facebook's determination to win the marketplace for electronic communication, an imperative utility in an exceedingly mobile era.
Combining text electronic communication and social networking, {messaging|electronic electronic communication|electronic communication} apps offer a fast manner for smartphone users to trade everything from transient texts to coquettish photos to YouTube clips - bypassing the necessity to pay wireless carriers for messaging services.
And it helps Facebook faucet teens United Nations agency can avoid the thought social networks and like WhatsApp and rivals like Line and WeChat, that have exploded in size as mobile electronic communication takes wing.
"People area unit vocation them 'Facebook Nevers,'" aforesaid Jeremy Liew, a partner at Lightspeed associate degreed an early capitalist in Snapchat.
WhatsApp is adding millions users per day, Facebook co-founder and Chief military officer Mark Zuckerberg aforesaid on his page on Wed.
"WhatsApp can complement our existing chat and electronic communication services to supply new tools for our community," he wrote on his Facebook page. "Since WhatsApp and (Facebook) traveler serve such completely different and vital users, we are going to continue investment in each."
Smartphone-based electronic communication apps area unit currently sweeping across North America, Asia and Europe.
"Communication is that the one factor that you simply ought to use daily, and it's a powerful network result," aforesaid Jonathan Teo, associate degree early capitalist in Snapchat, another red-hot electronic communication company that flirted year past with a multibillion dollar acquisition supply from Facebook.
"Facebook is additional concerning content and has not however absolutely worked out communication."
Even so, he balked at the value tag.
As a part of the deal, WhatsApp co-founder and Chief military officer Jan Koum can be part of Facebook's board, and therefore the social network can grant a further $3 billion price of restricted stock units to WhatsApp's founders, together with Koum.
That is on prime of the $16 billion in money and stock that Facebook can pay.
"Goodness gracious, it is a bargain for WhatsApp," Teo said.
Terms
Shares in Facebook softened five p.c to $64.70 once hours, from an in depth of $68.06 on the NASDAQ.
Facebook aforesaid on Wed it'll pay $4 billion in money and concerning $12 billion available in its single largest acquisition, dwarfing the $1 billion it acquired photo-sharing app Instagram.
The price acquired Instagram, that with simply thirty million users was already thought-about overvalued by several observers at the time.
Facebook secure to stay the WhatsApp whole and repair, and pledged a $1 billion money break-up fee if the deal falls through.
Facebook was suggested by Allen & Co, whereas WhatsApp has noncommissioned Morgan Stanley for the deal.
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