Facebook Inc revealed yesterday (Wednesday, February 19) that it has reached a definitive agreement to acquire WhatsApp for $19 billion in cash and stocks, in what is being called the largest deal in the social network’s history.
The transaction involves $4bn in cash, $12bn in stocks and $3bn in restricted stock units (RSUs) that vest over several years, adds a statement by Facebook. It also states that there are currently no plans to integrate the instant messaging app into the social network.
WhatsApp was founded by Ukrainian college drop-out, Jan Koum, and a Stanford alumnus, Brian Acton. The start-up reached 450 million people in five years and is adding one million users every day. Seventy per cent of users are active on any given day, while the messaging volume is approaching the entire global telecom SMS quantity (which is approximately seven trillion messages per year).
“WhatsApp is on a path to connect one billion people. Services that reach that milestone are all incredibly valuable,” says Mark Zuckerberg, Facebook’s founder and CEO.
Jan Koum, WhatsApp’s co-founder and CEO, adds: “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 Zuckerberg and Facebook, as we continue to bring our product to more people around the world.”
Upon closing the deal, all outstanding shares of WhatsApp capital stocks and options to purchase WhatsApp capital stocks will be cancelled in exchange for $4bn in cash and 183,865,778 shares of Facebook Class-A common stocks worth $12bn, based on the average closing price of the six trading days preceding February 18 (Tuesday) of $65.2650 per share.
In addition, upon closing, Facebook will grant 45,966,444 RSUs to WhatsApp employees worth $3bn, based on the average closing price of the six trading days preceding February 18 (Tuesday) of $65.2650 per share.
As of February 17 (Monday), Facebook had 2,551,654,996 outstanding Class-A and Class-B shares, along with approximately 139 million dilutive securities, primarily consisting of unvested RSUs. Class-A common stocks and RSUs issued to WhatsApp shareholders and employees upon closing will represent 7.9 per cent of Facebook shares based on current outstanding shares and RSUs.