The deal is broken down as $12B in Facebook shares, $4B in cash and an additional $3B in RSUs for employee retention.
Facebook posted on its blog, detailing the reasoning behind the acquisition as well. The post confirms that WhatsApp will continue to operate independently and retain its brand.
WhatsApp co-founder and CEO Jan Koum will join Facebook’s board, however Brian Acton who was turned down when he applied to join Facebook in 2009 prompting him to launch WhatsApp will remain with the messenger giant.
Facebook turned me down. It was a great opportunity to connect with some fantastic people. Looking forward to life’s next adventure.
— Brian Acton (@brianacton) August 3, 2009
“WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” said Mark Zuckerberg, Facebook founder and CEO in a statement.
“WhatsApp had every option in the world,” Zuckerberg continued in a post to his Facebook page, “so I’m thrilled that they chose to work with us. I’m looking forward to what Facebook and WhatsApp can do together, and to developing great new mobile services that give people even more options for connecting. I’ve also known Jan for a long time, and I know that we both share the vision of making the world more open and connected. I’m particularly happy that Jan has agreed to join the Facebook board and partner with me to shape Facebook’s future as well as WhatsApp’s.”
Jan Koum, WhatsApp co-founder and CEO, said, “WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide.”
WhatsApp will remain autonomous and operate independently. You can continue to enjoy the service for a nominal fee. You can continue to use WhatsApp no matter where in the world you are, or what smartphone you’re using. And 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.
The note about no advertising is interesting, as that’s obviously Facebook’s primary method of monetization on its main platform — and now Instagram. WhatsApp will also keep its subscription fees, which amount to $1 per user after the first year of use.
WhatsApp claims to have 450 million users and has spent $0 on marketing and doesn’t even employ a PR person or marketer; its growth all coming from users.
WhatsApp only employs around 50 people total. At 32 engineers, that’s $500M per engineer.
Facebook currently boasts 556 million mobile daily active users, and WhatsApp alone already has over half of that at 350M. One particular reason Facebook could be purchasing WhatsApp is to bolster its International footprint — as exemplified by one very telling chart.
Facebook is currently down in after hours trading.