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Facebook buys WhatsApp in $19bn deal
Facebook is buying WhatsApp in a cash and stock deal worth up to $19bn and will see the social network enter the fast-growing chat app market.
The Menlo Park-based social network will take over the app which boasts more than 450m users, who use it to message without paying fees. Users of the app send almost as many messages as the number of text messages sent over the entire global telecoms network.
The deal – which is 25 per cent in cash and the rest in stock – will see the app maintained as a separate entity, with its own headquarters. Jan Koum, WhatsApp’s co-founder and chief executive, will join the Facebook board.
Mark Zuckerberg, chief executive, first approached WhatsApp in the spring of 2012.
“WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” he said. “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.”
Like Facebook, WhatsApp has an engineering-led culture. Its founders Jan Koum and Brian Acton met while working at Yahoo in 1997 and have consistently prioritised having infrastructure for speed and reliability over their rivals’ flashier gimmicks such as digital stickers or in-app games.
Some 70 per cent of users send messages on WhatsApp every day, an engagement rate which is higher than Facebook’s. It was used to send 600m photos, 200m voice messages and 100m video messages each day in 2013, up more than 100 per cent from the year before.
Mr Koum said: “WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide. We’re excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world.”
In a blogpost, Mr Koum promised that WhatsApp’s product would not change as a result of the deal. “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,” he said.
“You can still count on absolutely no 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.”
Facebook was advised by Allen & Company LLC and Weil, Gotshal & Manges LLP; and WhatsApp was advised by Morgan Stanley and Fenwick & West, LLP.