Facebook announced today that it has reached an agreement to acquire WhatsApp for $4 billion cash, $12 billion in Facebook Class A stock, and $3 billion in Facebook restricted stock for WhatsApp employees. This will essentially make WhatsApp own 8% of Facebook. For now, however, it seems like WhatsApp will continue to operate independently of Facebook and Facebook Messenger is seen as a different product.
In fact, a termination fee is attached to the deal that would cost Facebook $1 billion in cash and $1 billion in shares if the deal fails to pass regulatory muster.
Facebook notes that WhatsApp now has over 450 million MAUs, with 70 percent of those active each day. In a staggering comparison, Facebook also notes that the messaging volume of WhatsApp approaches the SMS volume of the entire global telecom industry — and that it’s adding 1 million users a day.
WhatsApp message volume growth is still accelerating. Has probably now overtaken SMS. pic.twitter.com/KsR85Mplrt
— Benedict Evans (@BenedictEvans) January 20, 2014
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.”
Smartphone-based messaging apps are now sweeping across North America, Asia and Europe.
“Communication is the one thing that you have to use daily, and it has a strong network effect,” said Jonathan Teo, an early investor in Snapchat, another red-hot messaging company that flirted year ago with a multibillion dollar acquisition offer from Facebook.
This is exactly the tough market that we highlighted earlier yesterday, and it would be interesting to see how FaceBook plans to monetize this without advertisement since FaceBook has been traditionally about advertisement.
Additionally, with just only 32 engineers — making the ratio 1 engineer to every 14 million users, this is a very large valuation and juicy deal for Facebook. With only a total of 50 staff, and at 32 engineers, that’s $500 million per engineer.
WhatsApp has 32 engineers. They were acquired for $16 billion or $500 million per engineer.
— Mike Rundle (@flyosity) February 19, 2014
