Facebook closes WhatsApp deal at inflated $22bn

Recent stock gains of social media giant drive up total outlay

Tags: Facebook IncorporationMergers and acquisitionsWhatsApp (www.whatsapp.com)
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Facebook closes WhatsApp deal at inflated $22bn
By  Stephen McBride Published  October 7, 2014

Facebook's final outlay for messaging platform WhatsApp was an inflated $22bn, or $3bn more than was previously reported, stemming from an increase in the value of Facebook's stock, Reuters reported.

Facebook announced the acquisition in February at $19bn, a price 13 times that of Facebook's entire 2013 revenue. Facebook CEO Mark Zuckerberg cited "higher engagement than Facebook" as a reason for the move, given that Facebook took four years to amass 145m users, but in the same period of time, WhatsApp gained 419m. Analysts were not convinced and many questioned the WhatsApp platform's ability to make money.

WhatsApp founder Jan Koum is set to receive around $2bn in stock over the next four years to entice him to remain with the company. He will serve as WhatsApp chief executive and a Facebook director and will be paid an annual salary of $1, similar to Zuckerberg. Koum will receive 24.9m Facebook restricted stock units, yesterday priced at $1.9bn.

WhatsApp brings 600m monthly users, many of them in a younger age bracket, to Facebook, as the social media company seeks to shore up its mobile advertising gains.

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