Facebook now owns WhatsApp for $19 bn as deal closes
08 Oct 2014
Facebook concluded its acquisition deal with WhatsApp yesterday for $22 billion, an amount higher than the $16 billion reported earlier (See: Facebook to buy smartphone-messaging app WhatsApp for a staggering $16 bn).
Under the terms of the deal first unveiled in February this year, Facebook was to have paid $12 billion in stock and $4 billion in cash. Moreover, it offered to pay an additional $3 billion to WhatsApp employees and founders in restricted stock units (RSUs), which would vest over the next four years taking the deal price for Facebook to $19 billion
The acquisition had been a subject of controversy since the purchase amount was 19 times more than the amount Facebook paid for the photo-sharing app Instagram for $1 billion.
The US Federal Trade Commission (FTC) had been asked by a couple of privacy advocate groups to probe the deal, as it might be an unfair trade, which concerned the users' right to privacy. In addition to about 27 billion messages, the app processes 400 million photos per day, and counted over 600 million active monthly subscribers.
Dismissing speculation WhatsApp CEO Jan Kourn reassured users that it would not be like Facebook when it came to privacy. WhatsApp did not collect and store data of users' search activities, GPS location, names, addresses and email addresses, and it would remain even after the acquisition.
"We are forming a partnership that would allow us to continue operating independently and autonomously. Our fundamental values and beliefs will not change. Our principles will not change. Everything that has made WhatsApp the leader in personal messaging will still be in place," Kourn wrote in a blog post.
The closing of the deal had become a mere formality last week after the EU gave permission for the merger to go through following a lengthy examination, The Register reported.
Facebook won approval for the deal in the US earlier this year and CEO Mark Zuckerberg had been negotiating with regulators to let the deal go through.
With the transaction now officially complete, WhatsApp would be absorbed into Facebook. Koum would be appointed to the company's board of directors with a salary of $1 but he would get a stock package and $1.97 billion cash payout.