Facebook has announced that it will acquire mobile messaging service WhatsApp in a deal valued at $16bn.
The merger was revealed in a filing with the US Securities and Exchange Commission published on Wednesday. According to the paperwork, WhatsApp will become a wholly owned subsidiary of Facebook in exchange for $4bn in cash, with the remainder of the sale price provided in the form of Facebook stock.
The sale represents Facebook's largest acquisition to date, and also one of the biggest deals in the social media space so far. Zuck & Co spent less than $1bn to acquire Instagram in 2012.
By way of comparison, Microsoft acquired Nokia's entire mobile phone division in 2013 for just $7.5bn.
In addition to the sale price, Facebook has agreed to hand over the equivalent of another $3bn in Facebook stock directly to WhatsApp's founders and employees – of which there were around 50 as of the end of 2013. These bonus shares will vest over a period of four years.
The move is a strategic one for Facebook. WhatsApp is one of the largest of the "over the top" mobile messaging services, which allow smartphone users to send each other text messages without incurring SMS fees. In a December 2013 blog post, the Mountain View–based startup claimed to have over 400 million monthly active users.
Facebook offers its own, similar service in the form of Facebook Messenger, which links users to the social network's broader online offering, but it hasn't been as popular as competitors like WhatsApp and BlackBerry Messenger. By adding WhatsApp's considerable user base to the mix, the social network scores a considerable coup.
"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 in a canned statement. "I've known [WhatsApp cofounder and CEO] 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."
In a blog post, Koum said that WhatsApp users shouldn't worry that the service will change as a result of the merger.
"WhatsApp will remain autonomous and operate independently," Koum wrote. "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."
The merger must pass the usual regulatory hurdles before closing. If it fails to do so by August 19, 2014, the deal is off and Facebook must pay WhatsApp a fee of $1bn in cash and $1bn in Facebook stock.
Following the announcement of the merger, Facebook shares were trending down slightly in after hours trading. ®