Facebook to buy messaging app WhatsApp for $16B plus $3B in RSUs

Posted:
in General Discussion edited August 2014
Facebook on Wednesday announced its intentions to acquire popular messaging app WhatsApp in an initial cash and stock deal worth some $16 billion, not including an additional $3 billion provision for restricted stock units.

Facebook WhatsApp


According to Facebook, the social media giant said it plans to purchase mobile messaging firm WhatsApp with $4 billion in cash and approximately $12 billion worth of Facebook shares. Additionally, a provision provides for a $3 billion payout in restricted stock units to be granted to WhatsApp founders and employees. The RSUs will vest in four years after the deal closes.

"WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable," said Facebook founder and CEO Mark Zuckerberg in a prepared statement. "I've known [WhatsApp founder Jan Koum] for a long time and I'm excited to partner with him and his team to make the world more open and connected."

WhatsApp's brand will be maintained, as will its headquarters in Mountain View, Calif. After completion of the acquisition, Koum will take a seat at Facebook's Board of Directors.

Facebook said it will keep the cross-platform messaging app an independent entity and run the service much like the current implementation of Instagram. It remains unclear how the acquisition will affect WhatsApp's "mantra" of an ad-free experience, especially as Facebook becomes increasingly aggressive in leveraging the scope of its platform for such money-making activities.

Also unknown is what the buy means for WhatsApp's pricing structure, which currently stands at a yearly $0.99 fee for unlimited usage. The app was free when it debuted in the iOS App Store, but the company chose to institute the annual charge to keep the service ad-free under a crush of new users.

The major acquisition more than hints at a strong push in advancing Facebook's messaging service, Facebook Messenger, which is also widely used, but has been eclipsed by third-party services that offer a more user-friendly and connected experience. For now, however, WhatsApp and Facebook Messenger will remain separate standalone apps.

While WhatsApp touts a massive installed worldwide user base, Facebook is making definite inroads into Europe, where the messaging app is very popular.
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Comments

  • Reply 1 of 104
    Will they get access to the history of my messaging? Because this I would not like, and I will hit the 'Clear All Conversations' button right this minute.
  • Reply 2 of 104
    $16 billion!?! OMFG!!
  • Reply 3 of 104
    $16 billion!?! OMFG!!

    Read the article; it's only $4B in cash. The other $15B is FB stock.
  • Reply 4 of 104

    Not going to help.."Clear all conversations" clears the GUI.The transcripts remain on serverside because regulations stipulate that they have to.Actually Snapchat was in a controversy for the very same reason.They keep all the photos for a over a year even though to the user it expires in 10 secs

  • Reply 5 of 104
    The fed is behind this bull****. FB could just copy the app but noooooooo.... They are shelling out 4 billion big ones for one of thousands of millennial crap apps.
    Suckas!
  • Reply 6 of 104

    There's another tech stock crash coming...........

  • Reply 7 of 104

    Between Facebook and Google, there are now a fair few apps no one should ever use anymore…

  • Reply 8 of 104
    philboogie wrote: »
    Will they get access to the history of my messaging? Because this I would not like, and I will hit the 'Clear All Conversations' button right this minute.

    edit:
    Looks like they don't keep your info by default, if they tell the truth:
    http://www.whatsapp.com/faq/en/iphone/20888066
    Since your WhatsApp conversation history is not stored on our servers, we cannot retrieve any deleted messages for you. In WhatsApp version 2.10.1 and later, you can use our iCloud backup feature to back up and restore your chat history.
  • Reply 9 of 104
    sflocalsflocal Posts: 4,421member

    I came back from Germany a few weeks ago.  My friends there were all using WhatsApp on their iPhones.  What was funny is that when I explained to them what iMessage does (including FaceTime Audio), they all said they had no idea the iPhone works that way so they all jettisoned WhatsApp.  In addition, I trust Apple to keep my contact info secure versus have some 3rd-party company have access to my contact info.



    That being said $16B for what is essentially a glorified text-message app is just insane.  Whether cash or stock, it's still a stupid amount to pay.  I see a Motorola debacle happening when this is all done.



    Lucky founders though.  I'd be cashing out as much as I could when the time allows.  There's no way that company would be worth that much in what I call "reality".

  • Reply 10 of 104
    Quote:

    Originally Posted by PhilBoogie View Post





    Read the article; it's only $4B in cash. The other $15B is FB stock.

    PhilBoogie,

     

    For me 4 + 12 = 16. It may be different for you.

     

    Which part of, "Facebook to buy messaging app WhatsApp for $16B", did you actually miss in the title AND in the article? It does not matter if Facebook is paying $4B in cash and $12B in stock. The amount still adds to $16B.

     

    The next time you choose to stupidly respond to one of my posts, don't.

  • Reply 11 of 104
    philboogie wrote: »
    Read the article; it's only $4B in cash. The other $15B is FB stock.

    Yeah, right. Stock isn't real money.
    If you agree, just give me $12B in FB stock. I'm sure FB stockholders won't mind either.
  • Reply 12 of 104
    rogifanrogifan Posts: 10,669member
    sflocal wrote: »
    I came back from Germany a few weeks ago.  My friends there were all using WhatsApp on their iPhones.  What was funny is that when I explained to them what iMessage does (including FaceTime Audio), they all said they had no idea the iPhone works that way so they all jettisoned WhatsApp.  In addition, I trust Apple to keep my contact info secure versus have some 3rd-party company have access to my contact info.


    That being said $16B for what is essentially a glorified text-message app is just insane.  Whether cash or stock, it's still a stupid amount to pay.  I see a Motorola debacle happening when this is all done.


    Lucky founders though.  I'd be cashing out as much as I could when the time allows.  There's no way that company would be worth that much in what I call "reality".
    I see comments on the Engadget defending this price saying FB is paying for the users. Even still are whatsapp users really worth $50 a pop?
  • Reply 13 of 104
    philboogie wrote: »
    Read the article; it's only $4B in cash. The other $15B is FB stock.
    PhilBoogie,

    For me 4 + 12 = 16. It may be different for you.

    Which part of, "Facebook to buy messaging app WhatsApp for $16B", did you actually miss in the title AND in the article? It does not matter if Facebook is paying $4B in cash and $12B in stock. The amount still adds to $16B.

    You're overlooking the $3B in restricted stock, from the article, as well as the title:
    According to Facebook, the social media giant said it plans to purchase mobile messaging firm WhatsApp with $4 billion in cash and approximately $12 billion worth of Facebook shares. Additionally, a provision provides for a $3 billion payout in restricted stock units to be granted to WhatsApp founders and employees.
  • Reply 14 of 104
    Quote:

    Originally Posted by PaulMJohnson View Post

     

    There's another tech stock crash coming...........


    Hopefully it will not be an Apple stock crash! With the way analysts and bloggers LOVE to trash Apple for spending gobs of money, there many be an avalanche of articles starting tonight trashing Apple for not buying WhatApp before Facebook.

     

    I still cannot wrap my head around this $16B purchase for a messaging app!

  • Reply 15 of 104

    I agree... Dotcom Crash 2.0 is well on the way. The first one was so full of idiots it looked inevitable. The next one will at least have the effect of clearing out the detritus.

  • Reply 16 of 104
    Quote:

    Originally Posted by PhilBoogie View Post





    You're overlooking the $3B in restricted stock, from the article, as well as the title:

    I did not overlook the $3B in restricted stock. I do not know what is written in the provision. Do you? No guesses.

  • Reply 17 of 104
    Quote:

    Originally Posted by leavingthebigG View Post

     

    Hopefully it will not be an Apple stock crash! With the way analysts and bloggers LOVE to trash Apple for spending gobs of money, there many be an avalanche of articles starting tonight trashing Apple for not buying WhatApp before Facebook.

     

    I still cannot wrap my head around this $16B purchase for a messaging app!


    When a crash comes, the companies that actually make money tend to hold up OK.

     

    Companies like Facebook, with a P/E of 110 will struggle.  

     

    Zynga with a market cap of $4.22bn despite never having posted a profit will struggle.

     

    I heard someone suggest a Spotify IPO could value them at $24bn.  They are losing money.

     

    Amazon with a P/E of 590.  How can that be justified?  They can't keep growing forever......

     

    Apple with a P/E of 13 and actual profits will be OK.

     

    Microsoft with a P/E of 14 and actual profits will be OK.

     

    Eventually, sanity will be restored and investors will realize that you invest in companies because they are going to make money commensurate with the price of them.

  • Reply 18 of 104
    jd_in_sbjd_in_sb Posts: 1,483member
    SnapChat should have taken the multi-billion offer from Facebook. That door is now closed.
  • Reply 19 of 104
    philboogie wrote: »
    You're overlooking the $3B in restricted stock, from the article, as well as the title:
    I did not overlook the $3B in restricted stock. I do not know what is written in the provision. Do you? No guesses.

    MENLO PARK, CALIF. – February 19, 2014 – Facebook today announced that it has reached a definitive agreement to acquire WhatsApp, a rapidly growing 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 over four years subsequent to closing.

    source: FB

    Wouldn't that turn out to be 4 + 12 + 3 = 19?
  • Reply 20 of 104

    I trust Zuckerberg more than Page! ;)

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