Washington, Feb 20 (): Facebook on Thursday said it has made a “definitive agreement” to obtain mobile messaging firm WhatsApp for approximately $16 billion, including $4 billion in cash and about $12 billion worth of Facebook shares.
The purchase would be the biggest Internet deal since Time Warner’s US$124 billion merger with AOL in 2001, according to data compiled by Bloomberg.
WhatsApp is a popular mobile messaging app that is easy to used and is subscribed by more than 450 million users and is used daily. The app is founded by a Ukrainian immigrant who dropped out of college, Jan Koum and a Stanford alumnus, Brian Acton.The app is rocketing to 450 million users in five years and adding another million daily.
Mark Zuckerberg, Facebook’s founder and chief executive, posted on Facebook that he was excited to announce that they have acquired Whatsapp and their entire team would be joining them at Facebook.
In a conference call, Zuckerberg also declared that WhatsApp will continue to co-exist as an autonomous company and Facebook messaging service Messenger was not a rival.
Once the deal reaches accomplishment, Facebook says that WhatsApp will be run in a manner like the same way that Instagram operates today. That means that WhatsApp will retain its brand and headquarters and that it’s messaging product will remain separate from Facebook Messenger.
WhatsApp will function as an autonomous unit within Facebook, with all the existing employees coming in as part of the deal. However, the deal will give WhatsApp access to Facebook’s “expertise, resources and scale.”
On the conference call, Facebook said it is not trying to drive revenue from WhatsApp in the near term, rather the company is focusing on growth of the app. Zuckerberg said he does not expect trying to aggressively grow WhatsApp’s revenue until the service reaches “billions” of users.
That shows Facebook bought WhatsApp to add value to its prevailing messaging services, as well as for the long-term potential of the company.