Facebook Buys WhatsApp for $16bn

Facebook WhatsAppFacebook has announced the buyout of California-based OTT app WhatsApp for $16bn (£9.58bn), including $4bn in cash and a further $12bn in shares in the social network.

Facebook says that WhatsApp will continue to operate independently and retain its own brand. Its own, less-popular Messenger app will carry on being developed separately too, the company said. The agreement also provides for an additional $3bn in restricted stock units for WhatsApp employees over a four-year period following the acquisition.

The buyout accelerates Facebooks ability to bring connectivity and utility to the world, a statement explained, with eyes on 1bn users for WhatsApp, plus greater growth and engagement for both parties. WhatsApps co-founder and CEO Jan Koum, a veteran of Yahoo, will join Facebooks board.

Koum has always come out hard against ad-funded services and offers his app free for a year before charging $0.99. The paid-for service now has 450m users and continues to experience rapid growth, adding 100m users in the four months to December, with a further 50m joining from January to mid-February. It says it is now adding 1m people every day.

70 per cent of its users are active on a daily basis, stats comparable with Facebook users, and the company claims to be approaching a message volume equivalent to the entire global SMS ecosystem.

Speculation about WhatsApp being a viable acquisition for Facebook began as early as 2012 but the company has also been linked to other big hitters like Google.

Facebook bought Instagram in April 2012 for $1bn when it had just 13 employees and started monetising the service via ads in November 2013. Although it continues to work standalone, its creative ad teams are working very closely.