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Facebook buys WhatsApp for $16 billion in cash and shares

Facebook WhatsAppIn nearly simultaneous announcements on their respective blogs, it has been confirmed that Facebook is acquiring WhatsApp in a combined cash and stock share deal equaling an incredible $16 billion.

WhatsApp is a popular mobile messaging service that has grown to over 450 million users since its creation five years ago. It is a reasonable acquisition from Facebook, which has been seeking to improve its standing in the mobile messaging industry.

The only surprising this about this deal, other than the rather high price tag, is the fact that WhatsApp won’t become an official part of Facebook. Instead, it will act as an independent service that won’t change (for the moment) for current or future users. They are calling themselves Facebook partners, and say they will work alongside them, not as a fully integrated and isolated feature of the social networking site.

WhatsApp will remain autonomous and operate independently, the WhatsApp  blog post promised.

You can continue to enjoy the service for a nominal fee. You can continue to use WhatsApp no matter where in the world you are, or what smartphone you’re using. And you can still count on absolutely no ads interrupting your communication. There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product.

Of course, that could very well change once Facebook finds a way to make them a more ingrained part of the site. For the moment, they are staying the way they are. If they do end up making WhatsApp a more integrated feature, you can bet the ‘no ads’ policy is probably going to end. Facebook loves its ads, after all. Though there would be no fee for use…social media uses people and information as currency.

What does Mark Zuckerberg have to say about the deal?

WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable. I’ve known Jan [Koum, CEO and co-founder of WhatsApp] for a long time and I’m excited to partner with him and his team to make the world more open and connected.

The final payout will be done in $4 billion cash and $12 billion shares, with an additional $3 billion of restricted stock units to vest over a four year period. So the actual price is much higher, and the profits gathered off of Facebook shares given its dominance of the social media world is impressive.

Source: Facebook Blog, WhatsApp Blog

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