Facebook buys WhatsApp for $16 billion

In what may come as good news or bad news to many depending on how you feel about Facebook, is that the company has entered into an agreement to purchase WhatsApp. The purchase is expected to be in the tune of  for $16 billion in cash and stock. This is all reported based on a document filed with the SEC today which confirms the humongous  purchase. Just like what Facebook did when they bought Instagram, they plan to run WhatsApp independently after the acquisition — separate from Facebook Messenger — but the company claims the deal “accelerates Facebook’s ability to bring connectivity and utility to the world.” As if $16billion is not enough, Facebook is also throwing in an extra $3 billion in restricted stock units that will go to WhatsApp’s employees; those will vest over a period of four years after the acquisition is completed.

Facebook now gains more 450 million monthly users

According to a press release announcing the massive  buyout, CEO Mark Zuckerberg said,

“WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable. WhatsApp will complement our existing chat and messaging services to provide new tools for our community.”

Over 450 million people use WhatsApp on a monthly, and according to statistics in the press release, with 70 percent of those users active on a given day. The WhatsApp co-founder and CEO Jan Koum is expected to join Facebook’s board of directors as part of the deal.

WhatsAppGrowth

From what Jan Koum had to say in a blog post

“Doing this will give WhatsApp the flexibility to grow and expand, while giving me, Brian, and the rest of our team more time to focus on building a communications service that’s as fast, affordable and personal as possible, users don’t need to worry about ads “interrupting your communication.” There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product

When addressing investors on the deal, Zuckerberg said he proposed the purchase to Koum on Sunday, February 9th, with the two agreeing on a price a few days later. And he said, “We think that those are two different use cases, and that the world needed both,”

Does this mean we shall start seeing Ads in WhatsApp? Koum says in response that the two companies were more focused on growing how many people were using the app over how money will be made off it. So what do you think about this buy out?

 

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