By Parangat Shukla
According to a recent news, 1.3 billion users strong Facebook is all set to buy WhatsApp. How much is it going to pay? $19 Billion! Yes you read it right, it’s nineteen followed by nine zeroes, indeed a staggering amount. This is larger than any transaction ever done by rival companies Google, Apple and Microsoft. Here is what you need to know about this deal.
How is Facebook going to pay $19 bn?
· $12bn - Facebook Stock
· $4bn - Cash
· $3bn - Restricted Stock for the WhatsApp’s founders and employees
· $12bn - Facebook Stock
· $4bn - Cash
· $3bn - Restricted Stock for the WhatsApp’s founders and employees
WhatsApp is a messaging service, founded five years ago by a Ukrainian immigrant named Jan Koum and a Stanford alumnus, Brian Acton. Like Steve Jobs and Mark Zuckerberg, Jan did not complete his college as well, he was a college dropout. At present there are 450 Million Users, making it the leader among all messaging platforms worldwide, especially in North America, Europe and Asia. The number of users will shoot up to a billion soon, according to Zuckerberg.
Following his style of “casual” deals, Mark Zuckerberg proposed this tie up with WhatsApp over a dinner with Koum, around 10 days ago. In mid-2012, Mark closed a $1bn deal of picture sharing app Instagram, over a weekend. WhatsApp is really popular among the teenagers and young adults, which might have been the most likely reason behind this tie up. Gartner analyst Brian Blau said, “This is a bet on the future for Facebook. WhatsApp is in the business of collecting people’s conversations, so Facebook is going to get some great data.”
But is this myriad amount worth it? In this deal, Facebook is paying $42 per user, for Instagram it paid $33 per user. If we compare it to the deal of Viber, another popular messaging service, by Rakuten – a giant Japanese e-commerce company, amount paid per user was just $3! Even its competitors have never made such a huge deal. Google’s biggest deal, the Motorola Mobility, valued $12.5bn, while the largest deal Microsoft ever made was $8.5bn when it bought Skype. Apple on the other hand, has never done a deal worth more than a billion dollars. So is this investment worth it? Here is what Mark Zuckerberg posted on his Facebook account regarding why he bought WhatsApp.
Post by Mark Zuckerberg.