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Facebook Buys App For $15 Bil. More Than Instagram

by Jenny Hollander

When Facebook offered to buy Snapchat for a reported $3 billion, founder Evan Spiegel said no. But Facebook didn't spend too long licking its wounds: Mark Zuckerberg and co announced that Facebook will buy WhatsApp for $16 billion Wednesday. About $4 billion of that figure would be paid to WhatsApp in cold, hard cash, announced Facebook Inc., and the remaining $12 billion would be paid in stock. Under the agreement, WhatsApp's founder Jan Koum will be joining the Facebook board and become a company executive.

WhatsApp is one of the world's biggest instant-messaging services, and has more than 450 million users. In addition to the $16 billion buyout, a further $3 billion in Facebook stock units has been set aside from the WhatsApp team to use in the coming years.

On its company blog, WhatsApp posted:

Today we are announcing a partnership with Facebook that will allow us to continue on that simple mission. 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.
Here’s what will change for you, our users: nothing.
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.

On its own blog, Facebook wrote a very lengthy summary of the acquisition. A tidbit:

The acquisition supports Facebook and WhatsApp's shared mission to bring more connectivity and utility to the world by delivering core internet services efficiently and affordably. The combination will help accelerate growth and user engagement across both companies. "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. "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."

Facebook bought Instagram in 2012 for $1 billion, and tried (and failed) to buy Snapchat a year later for triple that — which feels like small fry compared to this purchase. According to Koum, WhatsApp employs just 30 people.