Gartner Inc. is an American information technology research and advisory firm head-quartered in Stamford, Connecticut, United States. According to their analyst Brain Blau “I am not surprised they (Facebook) went after WhatsApp, but the amount is staggering”. The amount is staggering indeed as Facebook is paying $19 billion for the acquisition of WhatsApp. Facebook is paying $12 billion in stocks, $4 billion in cash and the app’s founders and employees, 55 in all, will be granted restricted stock worth $3 billion that will vest over four years after the deal closes.
This deal has broken all the previous records as regards to acquisition of one company by another. So far Google paid $12.5 billion for Motorola Mobility, Microsoft paid $8.5 billion for Skype and Apple never made any deal over $1 billion.
WhatsApp is an application that allows users to send text, send pictures, videos and voice recordings free of charge as it connects with the internet. Facebook has now bagged all the market that was using WhatsApp which mostly include youngster. Currently WhatsApp has over 450 million user per year which is more than Twitter (241 million) in 2013. The app costs only $1 per year. Once the deal closes Facebook will be paying $42 per user. Facebook has to work pretty hard in order to keep its users interested and WhatsApp will help them capture more market with lesser work.
Facebook CEO Mark Zuckerberg said the service “doesn’t get as much attention in the U.S. as it deserves because its community started off growing in Europe, India and Latin America. But WhatsApp is a very important and valuable worldwide communication network. In fact, WhatsApp is the only widely used app we’ve ever seen that has more engagement and a higher percent of people using it daily than Facebook itself.”
WhatsApp is fast growing and is adding a million user a day to it total user base. At this rate it is inevitable that the application will reach the ” billion user” club, a club whose members include Google (owner of Youtube) and Facebook itself. This kind of app is incredibly valuable in the future and for that for Facebook it is worth the money.
Facebook’s shares fell $1.82, or 2.7 percent, to $66.24 in after-hours trading Wednesday after the deal was announced. Earlier in the day, the stock hit a 52-week high of $69.08.