Toronto – The owners of Whatsapp must be very happy people following the sale of their company to social networking giant Facebook. The deal struck earlier this year for a purchase in both cash and stock was originally $19 billion. Now that the ink is dry on the acquisition, the increase in Facebook shares has led to the value of the deal being worth $21.8 billion. That’s an increase of nearly 15% in the span of nearly 7 months. In accordance with the terms of the deal, Whatsapp founder Jan Koum has taken his seat at the board of directors.
Analysts generally concurred that the acquisition made sense in terms of aligning itself with Facebook’s business model. Whatsapp’s user base has surpassed 0.6 billion people with strong growth continuing in the emerging markets of China, Brazil, India, Mexico, and China. The only concern cited was the sheer size of the purchase. The $19 billion original price tag far exceeded any acquisition by tech giants Google and Apple. One interesting difference between Facebook and Whatsapp is that the latter operates sans advertising. Users are able to chat with one another and even make free phone calls including international ones. During the first year of service, there is no charge for the call service. Afterwards, it costs a meager $1 a year. Additionally, users may share voice recordings, photos, and videos.
Facebook will not be scrapping their own built-in messaging service called “Messenger”. Whatsapp will be an optional service their users can use. The European Union formally approved the acquisition this past Friday. Despite the fact that the app launched only five years ago, it has become the world’s number one messaging service exceeding China’s WeChat which has the home field advantage of being available to the largest population in the world.
Is it Whattsapp really worth $21.1 Billion?
Facebook now owns four of the world’s most popular smartphone apps: Facebook itself, Instagram, WhatsApp and Facebook Messenger – the social network says it’s committed to maintaining the latter, although we’ll see if that holds true in the long term.
Facebook wants to be on your smartphone in multiple ways, taking up several slots on your homescreen rather than just one. This strategy had already been outlined before yesterday’s news, though.
“Our vision for Facebook is to create a set of products that help you share any kind of content you want within the audience you want. We’re not just focused on improving the experience of sharing with all of your friends at once,” CEO Mark Zuckerberg told analysts during Facebook’s last earnings call.
“One of the things that we want to try to do over the next few years is build a handful of great new experiences that are separate from what you think of as Facebook today.”
Facebook’s shares climbed 32 cents to $77.76 in afternoon trading on Monday.