Deadline for Closing of Facebook’s WhatsApp Acquisition Pushed Back by One Year

WhatsApp650Facebook announced in its Form 10-Q filing with the Securities and Exchange Commission last week that it was extending its deadline to close its acquisition of messaging service WhatsApp by one year, to Aug. 19, 2015.

The original deadline was Aug. 19, 2014, and if the transaction is not finalized by Aug. 19, 2015, Facebook must pay a $1 billion termination fee to WhatsApp and issue the company the equivalent of $1 billion worth of class-A shares of Facebook common stock.

The acquisition was initially announced in February, and the Federal Trade Commission approved the deal in April, attaching strict privacy conditions.

Things are not moving as smoothly overseas, as Facebook requested in May that the European Commission review the deal, hoping to avoid antitrust investigations by several individual countries in the European Union. The EC investigation is still ongoing.

Facebook wrote in its Form 10-Q:

In February 2014, we entered into an agreement to acquire WhatsApp, a privately held cross-platform mobile messaging company, for 183,865,778 shares of our class-A common stock and approximately $4 billion in cash, subject to certain adjustments such that the cash paid will comprise at least 25 percent of the aggregate transaction consideration. After closing, we also expect to grant approximately 46 million restricted stock units to WhatsApp employees. The value of the equity component of the final purchase price and RSUs granted will be determined for accounting purposes based on the fair value of our common stock on the closing date.

This acquisition is subject to customary closing conditions, including certain regulatory approvals, and is expected to close in the second half of 2014. We have agreed to pay a termination fee to WhatsApp of $1 billion in cash and issue a number of shares of our class-A common stock equal to $1 billion, based on the average closing price of the 10 trading days preceding such termination, if the closing of this acquisition has not occurred by Aug. 19, 2014. This date may be extended by us to Aug. 19, 2015, if as of Aug. 19, 2014, certain closing conditions applicable to Facebook (other than the receipt of certain regulatory approvals) have been satisfied.

We currently expect these conditions will be satisfied and that we will extend the date to Aug. 19, 2015.

Readers: Will the EC eventually approve Facebook’s acquisition of WhatsApp? David Cohen is editor of Adweek's Social Pro Daily.