Facebook just announced in a regulatory filing that the company will acquire messaging behemoth WhatsApp for a huge amount of $16B in cash and stock
Facebook just announced in a regulatory filing that the company will acquire messaging behemoth WhatsApp for a huge amount of $16B in cash and stock. This comes after a long courting period, where Whatsapp had gracefully declined $4B and more from Facebook and other suiters.
According to the deal terms disclosed in the filing, the deal itself will depend on regulatory approval (which is a very big IF to pass) and in case it fails to do so, Facebook will be “fined” with $1B in cash and $1B in company stocks.
According to the official statement released by Facebook, “The acquisition supports Facebook and WhatsApp’s shared mission to bring more connectivity and utility to the world by delivering core internet services efficiently and affordably. The combination will help accelerate growth and user engagement across both companies.”
Mark Zuckerberg’s post about the acquisition
The post also revealed that WhatsApp currently serves over 450 million people each month, 70% of whom are active any given day: “WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” said Mark Zuckerberg, Facebook founder and CEO. “I’ve known Jan for a long time and I’m excited to partner with him and his team to make the world more open and connected.”
WhatsApp will continue to operate independently and retain its brand after the acquisition and WhatsApp co-founder and CEO Jan Koum is expected to join Facebook’s board. According to our sources, Koum is expected to take an active role in Facebook, assisting the company with its mobile and messaging strategy.
These are the details as they appear in the filing:
On February 19, 2014, Facebook, Inc. (“Parent”) entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Rhodium Acquisition Sub II, Inc., a Delaware corporation and wholly owned (in part directly and in part indirectly) subsidiary of Parent (“Acquirer”), Rhodium Merger Sub, Inc., a Delaware corporation, a direct wholly owned subsidiary of Acquirer (“Merger Sub”), WhatsApp Inc., a Delaware corporation (“WhatsApp”), and Fortis Advisors LLC, as the stockholders’ agent.
Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into WhatsApp (the “First Merger”), and upon consummation of the First Merger, Merger Sub will cease to exist and WhatsApp will become a wholly owned subsidiary of Acquirer. The surviving corporation of the First Merger will then merge with and into Acquirer, which will continue to exist as a wholly owned (in part directly and in part indirectly) subsidiary of Parent. Upon consummation (the “Closing”) of the transactions contemplated by the Merger Agreement (the “Merger”), all outstanding shares of WhatsApp capital stock and options to purchase WhatsApp capital stock will be cancelled in exchange for an aggregate of 183,865,778 shares of Parent’s Class A common stock (valued at $12 billion based on the average closing price of the six trading days preceding February 18, 2014 of $65.2650 per share (“Specified Price”)) and $4 billion in cash to existing WhatsApp securityholders, subject to certain adjustments such that the cash paid will comprise at least 25% of the aggregate transaction consideration. In addition, upon Closing, Parent will grant 45,966,444 restricted stock units to WhatsApp employees (valued at $3 billion based on the Specified Price).