The largest social network in the world – Facebook Inc. – announced that it has reached an agreement to buy the mobile-messaging startup WhatsApp Inc. in a deal estimated to 19 billion dollars in cash and stock. The transaction is considered to be the biggest Internet purchase in more than ten years.
Facebook Inc. made an official statement, revealing that the acquisition is estimated to 12 billion dollars in stock, 4 billion dollars in cash and 3 billion dollars in restricted shares. According to data compiled by Bloomberg, this is the largest Internet deal after the merger between Time Warner and AOL in 2001, which amounted to 124 billion dollars. Currently, WhatsApp has more than 450 million members, and about 1 million users are added on a daily basis.
After the 700-million-dollar acquisition of the photo-sharing service Instagram in 2012, the Chief Executive Officer of Facebook – Mark Zuckerberg – has become more focused on constantly adding some applications such as messaging and news in order to attract new mobile devices users. The purchase of WhatsApp is considered to be the largest deal in the history of Facebook and is a worthy rival of some apps provided by Twitter Inc., Kik Interactive Inc. and Snapchat Inc.
One of the analysts working for Bloomberg Industries – Paul Sweeney – said in an e-mailed statement cited by Bloomberg: “Facebook is clearly taking out one of its main competitors. They are buying 450 million loyal users and an extraordinary growth story, but at a staggering cost.”
As reported by Bloomberg, the acquisition assesses the financial value of WhatsApp at more than half the market value of Twitter, which is estimated to 31.5 billion market and has 241 million active users. Facebook Inc.s shares decreased as much as 5.7% in extended trading and reached 64.18 dollars after the company announced the purchase.
One of the analysts working for Emarketer Inc – Debra Aho Williamson said for Bloomberg: “They seem to have made a pretty strong statement with this acquisition. Facebook has come to the realization that it needs a portfolio of apps to reach people with different use cases, different demographics, or different ways of communicating.”
Facebook Inc.s shares rose by 1.13% on Wednesday in New York to close at $68.06, marking a one-year change of +135.26%. According to CNN Money, the 39 analysts offering 12-month price forecasts for Facebook Inc. have a median target of $70.00, with a high estimate of $82.00 and a low estimate of $55.00. The median estimate represents a +2.85% increase from the last close.
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