Facebook Inc. will buy WhatsApp, mobile messaging service for $19 billion in stock and cash. Facebook announced the mega deal on Wednesday about buying most popular messaging service WhatsApp which has earned 450 million users in few years. According to deal Facebook will pay $4 billion in cash and $12 billion in stock.
What is WhatsApp?
WhatsApp is a cross platform smartphone app which allows users to exchange messages, videos and photos free of cost. WhatsApp was founded by Jan Koum (a Ukrainian immigrant) and Brian Action (Stanford Alumnus). WhatsApp is a leader in messaging app which is widely ranging across Asia, Europe and North America. The App is popular in teens, youngsters and adults. WhatsApp started with around 55 employees at Silicon Valley, San Francisco.
Facebook and WhatsApp Deal
This deal will render the market value of Facebook about 9%. In comparison with all other deal, Facebook did the biggest deal. WhatsApp deal raised the messaging market for Facebook and covers all social networks. The deal was announced on Wednesday. Mark Zuckerberg proposed an offer to CEO of WhatsApp Koum about tie up with WhatsApp just 10 days before. Koum will join Facebook Inc.’s board of directors under the deal. Jan Koum said “The tie-up gives WhatsApp the flexibility to grow and expand.
Biggest Deal Ever
Facebook is doing a massive deal with WhatsApp. Facebook will pay $42 per user. This has become one of the biggest deals out of all such deals happened before in the history of multinational companies. When compared, Google spent $12.5 billion for Motorola Mobility deal, Microsoft paid $8.5 million for Skype and Apple had never done a deal above $1 billion.
Reason behind WhatsApp deal
WhatsApp has a huge amount of users in few years. Users include teens and adults as well. People are involving with online conversation and most of times prefer WhatsApp. This deal provides Facebook a new entry in to the messaging world. It will upgrade the market for Facebook. Five years of its establishment it has strong network and 70 percent of its users operate this app daily. Mark Zuckerberg added “WhatsApp is on a path to connect one billion people. The services that reach that milestone are all incredibly valuable.
WhatsApp service is free for first year of services but it will charge $1 annually after termination of 1st year. Facebook said that WhatsApp will work independently as before and still continue to work on its policy of “No Advertising.