Facebook to buy WhatsApp

Facebook to buy WhatsApp

Mark Zuckerberg’s Facebook has agreed to buy mobile-messaging startup WhatsApp in a $19 billion cash and stock deal.

WhatsApp serves more than 450 million users – adding an estimated 1 million users per day – and the acquisition moves Facebook closer to its goal of becoming the leader in the mobile messaging market.

The initial deal is worth $16 billion and Facebook will grant an additional $3 billion worth of restricted stock units to WhatsApp’s founders.

These include Jan Koum, co-founder and CEO at WhatsApp, who will also join the board at Facebook as part of the agreement.

Messaging applications like WhatsApp bypass the need to pay carriers for messaging services and have been growing in popularity at a phenomenal pace worldwide.

Eden Zoller, principal analyst of consumer telecoms at Ovum, said that the acquisition will help Facebook to grow its mobile footprint.

“Innovation in mobile services and capabilities are imperative,” Zoller said.

“WhatsApp will enhance Facebook’s mobile strategy and make the service grow faster and be stickier with mobile first users,” Zoller said.

Ovum statistics expect operator-based mobile messaging traffic to peak at 7.7 trillion messages this year, and begin to decline in 2015 at 7.6 trillion.

“SMS volumes were higher than social messaging volumes in 2012, but in 2013 messaging apps took a big leap forward and overtook traffic,” Zoller said.

“We can expect strong growth in traffic to continue in the coming years.”

Facebook has promised to keep the WhatsApp brand and has pledged a $1 billion cash break-up fee – incidentally the same amount it paid for photo-sharing app Instagram in 2012 – if the deal falls through.

The social media mogul was first rumoured to be eyeing WhatsApp in December 2012.

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