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Facebook to buy messaging service WhatsApp for $19 billion

social media Updated: Feb 20, 2014 09:32 IST
Yashwant Raj

Facebook on Wednesday announced it was acquiring WhatsApp, a world leader in mobile messaging over the internet with 35 million users in India, for $19 billion in stock and cash.

Founded five years ago, WhatsApp today claims a subscriber base of more than 450 million users — mostly in Europe, Latin America and India — 70% of whom use the app every day.

"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.

"WhatsApp's extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide," said Jan Koum, WhatsApp co-founder and CEO who will now join the Facebook board as a director.

Read: Facebook-WhatsApp most expensive deal, other big buys

In a statement released late on Wednesday, Facebook said it is buying Mountain View, California-based WhatsApp for $4 billion in cash and $12 billion worth of Facebook shares. As part of the acquisition, WhatsApp founders and employees will get another $3 billion in Facebook stock that they can cash in after four years.

WhatsApp will continue to co-exist as an autonomous company, Zuckerberg told investors in a conference call, adding the Facebook messaging service Messenger was not a rival.

WhatsApp-Facebook deal is the most expensive so far (Durga M Sengupta/HT)

Facebook has moved aggressively in recent years to catch up with the global shift towards mobile from desktop computing. It paid $1 billion to acquire Instagram in 2012.

It tried, and failed, to buy Snapchat for $3 billion in 2013.

Both companies refused to give geographical breakdowns of subscribers, but BGR, a tech news service, has reported that WhatsApp had 35 million users in India in January, picking up 5 million in just a month.

This wildly popular app, which is free in the first year, is among many messaging services that enable smartphone users to go around their cellular texting plans that come with costs and caps.

Read: WhatsApp: a booming smartphone message service

WhatsApp has local rivals in South Korea and Japan. But as Zuckerberg told investors in the conference call, it is a clear leader in "Europe, Latin America and India".

Zuckerberg and Koum, who is eight years older at 37, have known each other for a while. But, they first talked about the deal nine days ago, on an offer from Zuckerberg.

Zuckerberg's status update on Facebook says he "excited" about striking this deal: Post by Mark Zuckerberg.