Why Snapchat Rejected Facebook's $3bn Acquisition Offer, and Other Secrets from Email Leak

Alex Spencer

SnapchatSnapchat is the latest company to have its secrets leaked after hackers exposed the private emails of Michael Lynton, CEO of Sony Entertainment – and a member of Snapchat's board.

There are a host of revelations in the emails, including three acquisitions made by Snapchat over the past six months, details of Facebook's acquisition offer, an investment deal with Tencent which fell through, and plenty more besides.

Facebook and Tencent
The emails confirm that Snapchat rejected an acquisition offer from Facebook, apparently in excess of $3bn (£1.9bn), last October.

An email to Lynton from Mitch Lasky, another board member, shines some light on the thought process behind Snapchat turning down the deal:

"I think while [Snapchat CEO Evan Spiegel] liked the team and idea of Facebook, he’s been disappointed with the number he’s getting from Zuck, so he’s now characterizing his conversations with Facebook as a gambit to scare a higher number out of the Series C investor."

Around the same time, Snapchat was also negotiating an investment deal with Chinese internet giant Tencent. The reasons behind this, according to Lasky are that "[Tencent] thought the $4bn price tag was unsupportable, they were offended by the terms, and they didn’t like the fact that I didn’t know what was happening."

In August, Snapchat agreed to buy, a QR code and iBeacon tech firm, for $50m (£32m) – of which $14m was cash. The emails call the deal "Super secret as usual (won't be announced publicly)" and reveal that's team of seven engineers would be joining Snapchat "in the coming weeks".

In September, it picked up Vergence Labs, creator of 'Epiphany Eyewear', a pair of smart glasses which can record and store video, for $15m. Other emails suggest that Snapchat loaned Vergence $2m prior to the deal.

Snapchat's July acquisition of video tech company AddLive was already announced in July. However, the email reveals the amount Snapchat paid: $30m, $10m in cash and the remainder in stock and employee incentives.

Snapchat Music

The emails also show the behind-the-scenes development of a Snapchat music service. Despite meetings with the likes of Sony Music and Vevo, this service doesn't look likely to see the light of day anytime soon.

Sony Music president of global digital business & US sales Michael Kooker wrote of his meeting with Snapchat's Spiegel: "he thinks every music service in the market is shit and he wants to be a curator. He doesn't want to build a music service but he would like to have a record label ... He also wants to participate in the upside that he will create by promoting them on the [Snapchat] platform."

Negotiations with Vevo, to integrate its music video player into Snapchat, broke down over commercial terms. "They want 40 per cent of gross which is just not workable for us," wrote Vevo president Rio Caraeff in an email to Lynton.