Facebook Agrees To Buy WhatsApp For £11.4bn

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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Facebook will take over the popular mobile instant messaging app

Facebook has agreed to purchase mobile instant messaging application WhatsApp in a deal potentially worth $19 billion (£11.4bn), as the social network seeks to expand its reach to more users around the world.

The company will initially pay around $16 billion (£9.6bn), $4 billion (£2.4bn) in cash and $12 billion (£7.2bn) in shares, while the deal also provides for another $3 billion (£1.8bn) in restricted stock options for WhatsApp founders and employees.

Mark Zuckerberg, Facebook CEO, says the two companies share the mission of bringing affordable connectivity to the world, and promises that WhatsApp will continue to remain autonomous once the acquisition is completed, while founder and CEO Jan Koum will join the Facebook board.

Facebook WhatsApp

WhatsApp iPhone“WhatsApp is on a path to connect one 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.”

“WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide,” adds Koum. “We’re excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world.”

The acquisition is the largest ever agreed by Facebook, which bought photo app Instagram for $1 billion in 2012 and has been linked with a $3 billion takeover of photo sharing service Snapchat.

Google was reportedly offering up to $1 billion for WhatsApp last year, but Zuckerberg clearly thinks $19 billion is a price worth paying to gain access to WhatsApp’s 450 million users, 70 percent of whom use the service daily, with one million new users added every day.

The number of messages sent via over-the-top messaging services such as WhatsApp and iMessage exceeds those sent by SMS, costing carriers billions of pounds, and earlier this month, instant messaging and VoIP app Viber was bought by Japanese e-commerce giant Rakuten for a comparatively cheap $900 million (£541m).

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