NEW YORK: Facebook Inc decided to purchase the fast-growing mobile-messaging startup WhatsApp for $16 billion, as the world’s largest social network looks for ways to boost its popularity, especially among a younger crowd. WhatsApp is one of the world’s most widely used messaging apps. Apparently that also means it’s worth an exorbitant sum of money to someone like Facebook who has just agreed to buy WhatsApp for the whopping sum of $16 billion.
Facebook said on Wednesday it will pay $4 billion in cash and about $12 billion in stock in its single largest acquisition, dwarfing the $1 billion it paid for photo-sharing app Instagram.
As part of the deal, WhatsApp co-founder and chief executive Jan Koum will join Facebook’s board, and the social network will grant an additional $3 billion worth of restricted stock units to WhatsApp’s founders, including Koum.
Also, Facebook promised to keep the WhatsApp brand and service, and pledged a $1 billion cash break-up fee were the deal to fall through.
Facebook promises the 2 companies will continue to operate separately, with WhatsApp CEO Jan Koum finding himself in a new position on Facebook’s board of directors. This move helps the social networking giant extend its reach beyond that of a simple social network, with Facebook hoping to “accelerate growth and user engagement across both companies.”
Facebook was advised by Allen & Co, while WhatApp has enlisted Morgan Stanley for the deal.