Facebook closes WhatsApp acquisition at

new price tag of USD 22 billion

Alexei Oreskovic San Francisco Last Updated: October 7, 2014 | 10:48 IST

(Photo: Reuters)
RELATED
Facebook, the world's most popular social network, gained European Union
clearance on Friday for its proposed $19 billion takeover of mobile messaging
startup WhatsApp in a deal setting it against the telecoms industry.
The landmark deal is the largest in Facebook's 10-year history and will give it a
strong foothold in the fast-growing mobile messaging market.
WhatsApp is poised to become a potentially powerful rival to companies such
as Deutsche Telekom, Orange and Telecom Italia with its plan to add free
voice-call services for its 450 million customers later this year.
The European Commission said the Facebook-WhatsApp deal would not
hurt competition.
"We have carefully reviewed this proposed acquisition and come to the
conclusion that it would not hamper competition in this dynamic and growing
market. Consumers will continue to have a wide choice of consumer
communications apps," European Competition Commissioner Joaquin
Almunia said.
Reuters was the first to report on Sept. 25 that the deal would be cleared
unconditionally. U.S. regulators nodded through the deal in April.
WhatsApp and its rivals such as KakaoTalk, China's WeChat and Viber have in
recent years won over telecoms operators' customers with a free text
messaging option, posing a serious threat to the sector's revenues from this
business, which totalled about $120 billion last year, according to market
researcher Ovum.

Facebook closed its acquisition of mobile messaging service WhatsApp on
Monday, with the final price tag rising an additional $3 billion to roughly $22
billion because of the increased value of the social networking website's stock
in recent months.
WhatsApp founder Jan Koum will receive nearly $2 billion in stock, vesting
over a four-year period, as an inducement for him to stay with the company,
according to a regulatory filing on Monday.
Koum, who will serve as WhatsApp Chief Executive and become a Facebook
director, will earn a $1 annual salary, similar to Facebook Chief Executive
Officer Mark Zuckerberg. Koum will receive 24.9 million Facebook restricted
stock units, worth roughly $1.9 billion at Monday's share price.
Facebook paid $4.59 billion in cash and 178 million shares of its stock for
WhatsApp, as well 46 million of grants in restricted stock units for WhatsApp
employees that will vest over a four year period. At Monday's opening
Facebook share price of $77.17 in the US market, the deal translates to roughly
$21.8 billion.
The acquisition, which Facebook announced in February and recently received
regulatory approval in Europe, underscores the sky-rocketing values of fast-
growing Internet startups, and the willingness of established players such as
Facebook and Google to pay out for them.
WhatsApp, which has more than 600 million monthly users, is among a new
crop of mobile messaging and social media apps that have become
increasingly popular among younger users. Snapchat, a privately owned
mobile app that allows users to swap photos that can disappear after a few
seconds, is raising money at a $10 billion valuation, according to media
reports.
WhatsApp, which has more than 70 employees, will continue to be based at its
Mountain View, California, location.