Business

Facebook buys WhatsApp for US$16b

Thursday, February 20, 2014 | 8:31 AM    

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KINGSTON, Jamaica -- Facebook announced on Wednesday afternoon that it had reached an agreement to buy popular mobile messaging startup WhatsApp for an upfront total of US$16 billion.

This will include $4 billion in cash and about $12 billion in Facebook shares. 

Co-founder and CEO of Whatsapp, Jan Koum will join Facebook’s Board of Directors, but WhatsApp will continue to operate independently within Facebook, much like Instagram. 

Forbes news reported that the purchase price could rise to as much as $19 billion once you factor in an additional $3 billion in restricted stock units that will be granted to WhatsApp’s founders and employees vesting over four years. 

"The purchase price is insanely high for a startup with only 55 employees. The $19 billion valuation means Facebook believes WhatsApp is worth over $42 per user. Major companies that have market caps under $19 billion include: United Continental, American Airlines, Ralph Lauren, Marriot International, Campbell Soup, Coach, and Tyson Foods," the report said.

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