Acquisition accelerates Facebook's quest for messaging world domination
Facebook announced today that it has reached a definitive agreement to acquire WhatsApp, a rapidly growing cross-platform mobile messaging company, for a total of approximately $16 billion, including $4 billion in cash and approximately $12 billion worth of Facebook shares.
The agreement also provides for an additional $3 billion in restricted stock units to be granted to WhatsApp's founders and employees that will vest over four years subsequent to closing.
The agreement comes as FaceBook's own messaging platform, FB Messenger, has failed to make traction in the market. According to new figures from Mobidia, provider of client-based mobile and smart device data usage solutions, FB Messenger sits at the bottom of the pile in terms of average weekly time in app at around 25 minutes, and average weekly sessions per user again at around 25. This is versus WhatsApp, which hits around 200 minutes for weekly time in app, and around 220 average weekly sessions per user.
According to WhatsApp's figures, the free service has more than 450 million users, and 70% of those are active each day. It is also adding more than one million new registered users per day and its messaging volume is approaching the entire global telecom SMS volume.
The acquisition supports Facebook and WhatsApp's shared mission to bring more connectivity and utility to the world by delivering core internet services efficiently and affordably. The combination will help accelerate growth and user engagement across both companies.
'WhatsApp is on a path to connect one billion people. The services that reach that milestone are all incredibly valuable,' said Mark Zuckerberg, Facebook founder and CEO. 'I've known Jan for a long time and I'm excited to partner with him and his team to make the world more open and connected.'
Jan Koum, WhatsApp co-founder and CEO, said: 'WhatsApp's extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide. We're excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world.'
Mobidia vice president of marketing, Chris Hill, commented on FaceBook's motivation behind the acquisition: 'WhatsApp's average weekly time in app is very high versus FB Messenger, and globally against all other major messaging platforms including BBM, Line and Viber it is still very high, all of which only get a quarter to half of its weekly app usage time. FB Messanger has not been very successful at all.
'However, with this acquisition, Facebook will be able to reach WhatsApp's 450 million active users, which cover a lot of different demographics whereas Facebook has a problem of teens going elsewhere to network. Also, WhatsApp has been very successful in emerging markets where texting is too expensive for users, and that's an area that Facebook has been very public about doing more in,' added Hill.
Facebook fosters an environment where independent-minded entrepreneurs can build companies, set their own direction and focus on growth while also benefiting from Facebook's expertise, resources and scale. This approach is working well with Instagram, and WhatsApp will operate in this manner. WhatsApp's brand will be maintained; its headquarters will remain in Mountain View, CA; Koum will join Facebook's Board of Directors; and WhatsApp's core messaging product and Facebook's existing Messenger app will continue to operate as standalone applications.