Facebook has reached an agreement to acquire WhatsApp, a cross-platform mobile messaging company, for a total of approximately $16 billion, including $4 billion in cash and approximately $12 billion worth of Facebook shares. The agreement also provides for an additional $3 billion in restricted stock units to be granted to WhatsApp’s founders and employees that will vest during four years subsequent to closing.
WhatsApp has 450 million monthly users and adds about 1 million new users per day. WhatsApp’s brand will be maintained; its headquarters will remain in Mountain View, Calif.; co-founder and CEO Jan Koum will join Facebook’s board of directors; and WhatsApp’s core messaging product and Facebook’s existing Messenger app will continue to operate as standalone applications.
Facebook said in a statement that the acquisition supports Facebook and WhatsApp's shared mission to deliver core Internet services efficiently and affordably, and that the combination will help accelerate growth and user engagement across both companies.
Facebook purchases WhatsApp following a failed effort to purchase visual messaging service Snapchat for $3 billion. However, WhatsApp has been around five years as opposed to two years for Snapchat, and added 100 million new users in fourth quarter 2013. The company sends text messages over WiFi Internet instead of cellular networks. The WhatsApp app is free to download and use for the first 12 months, then costs 99 cents.
"WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable," said Mark Zuckerberg, Facebook founder and CEO. "I've known Jan for a long time and I'm excited to partner with him and his team to make the world more open and connected."