Facebook has a deal to buy the messaging platform WhatsApp for $16 billion, the company announced. WhatsApp has more than 450 million users, according to the latest numbers from the company, and Facebook has been in the market for the hot messaging space.
"WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable," Facebook CEO Mark Zuckerberg said. "I've known Jan [Koum] for a long time and I'm excited to partner with him and his team to make the world more open and connected."
WhatsApp is a direct competitor with Facebook Messenger, and the deal has a potential break-up fee that would cost Facebook $2 billion if regulators denied the deal.
A total price tag of $19 billion includes $4 billion in cash and $12 billion in Facebook shares, as well as another $3 billion in restricted stock units to WhatsApp's founders and staff. It would be Facebook’s largest acquisition by far, having bought Instagram for about $1 billion in 2012.
WhatsApp is a leader in the new messaging craze, and another company in that space, Viber, was just purchased for $900 million. Viber was more of a mobile Internet calling platform, with about 100 million monthly users.
WhatsApp is notoriously averse to advertising and doesn't store user data, a policy that appears at odds with Facebook's deep abilities to collect user information. Still, WhatsApp and Facebook said the messaging app would continue to run independently of the new parent company.
In a blog post, WhatsApp CEO Koum promised nothing would change for his users.
Messaging is considered the next social frontier for teenagers, a demographic that could be losing interest in Facebook. Snapchat, the disappearing photo sharing platform, best exemplifies the new youth obsession with alternative messaging services, and Facebook was said to be interested in buying that Los Angeles company for $3 billion last year.
Facebook says that 70 percent of WhatsApp’s 450 million users are active daily. Other companies like Kik and Tango also attract tens of millions of users.
Koum is set to join Facebook’s board of directors.