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- Published on Thursday, 20 February 2014 09:10
Facebook agrees to buy WhatsApp Inc for as much as US$19 billion (RM62.6 billion) in cash and stock./Google ImagesNEW YORK: Facebook Inc, the world’s largest social network, agreed to acquire mobile-messaging startup WhatsApp Inc for as much as US$19 billion (RM62.6 billion) in cash and stock, seeking to expand its reach among users on mobile devices.
The purchase would be the biggest Internet deal since Time Warner’s US$124 billion merger with AOL in 2001, according to data compiled by Bloomberg. The accord includes US$12 billion in stock, US$4 billion in cash and US$3 billion in restricted shares, Facebook said today in a statement.
WhatsApp has more than 450 million members, with 1 million users being added daily, Facebook said.
Facebook, which acquired photo-sharing service Instagram for about US$700 million in 2012, is counting on applications beyond its main social network to reach more users on smartphones and tablets. WhatsApp competes with Snapchat Inc, which rebuffed a US$3 billion offer from Facebook last year, as well as services from Twitter Inc and Kik Interactive Inc.
“Facebook is clearly taking out one of its main competitors,” Paul Sweeney, a Bloomberg Industries analyst, said in an e-mail. “They are buying 450 million loyal users and an extraordinary growth story, but at a staggering cost.”
Mobile devices
Mountain View, California-based WhatsApp, which is popular in Europe, lets users send messages through its service on mobile devices based on different operating systems including Apple Inc’s iOS, Google Inc’s Android, Microsoft Corp’s Windows Phone and BlackBerry Ltd’s software.
Unlike traditional text messages, which consumers pay for through their mobile-phone plans, WhatsApp is free for the first year, and then costs 99 US cents a year after that. It also competes with Tencent Holdings Ltd’s WeChat in China, KakaoTalk in Korea and Line in Japan, as well as Facebook’s own application, Facebook Messenger.
Unlike traditional text messages, which consumers pay for through their mobile-phone plans, WhatsApp is free for the first year, and then costs 99 US cents a year after that. It also competes with Tencent Holdings Ltd’s WeChat in China, KakaoTalk in Korea and Line in Japan, as well as Facebook’s own application, Facebook Messenger.
The deal is the largest ever for Menlo Park, California- based Facebook, and prices WhatsApp at more than half of Twitter’s market value. Facebook shares fell as much as 5.7 per cent to US$64.18 in extended trading after the acquisition was announced. They rose 1.1 per cent to US$68.06 at the close in New York.
Bloomberg
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