{UAH} Facebook Inc buying WhatsApp in US$19-billion deal

Facebook Inc buying WhatsApp in US$19-billion deal

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Matt Hartley | February 19, 2014 | Last Updated: Feb 19 7:11 PM ET
More from Matt Hartley | @thehartley

AP Photo/Karly Domb SadofThis Wednesday, Feb. 19, 2014 photo, shows the WhatsApp and Facebook app icons on an iPhone in New York. On Wednesday Facebook announced it is buying mobile messaging service WhatsApp for up to US$19 billion in cash and stock.

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Facebook Inc. continued its quest to position itself as a mobile-first company on Wednesday when it revealed a deal to acquire WhatsApp Inc. for a shocking value of US$19-billion in cash and stock.

Facebook isn’t just making money on mobile — it’s become a mobile company

There was a time when Facebook made no money from the use of its mobile products — and its ability to do so, in the company’s own words, was “unproven.”

Now, almost two years since admitting those and other risks in a prospectus for its IPO, Facebook just enjoyed its first billion dollar quarter for mobile ad revenue, which makes up 53% of its revenue overall.

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The world’s largest social networking company said in a regulatory filing that the deal includes US$4-billion in cash as well as 183.9 million Facebook shares, valued at roughly US$12-billion. The offer also includes an additional US$3-billion in restricted shares for WhatsApp’s founders and employees.

For Facebook, the deal marks the company’s latest high profile acquisition designed to expand its offerings beyond the desktop and to dominate the social experience on mobile devices. Shares of Facebook have climbed nearly 80% since the company’s initial public offering and it now appears Facebook is using its newfound financial muscle to quickly beef up its mobile offerings.

Ever since Facebook went public in May 2012, founder and chief executive Mark Zuckerberg has maintained that the company’s future depends on enabling users to access Facebook’s services on mobile devices, and generating ad revenue from those mobile interactions.

With more than 450 million users around the world, WhatsApp is one of the most widely used messaging applications for mobile devices. The service, which is especially popular in Europe, enables users to send short messages and photos to their friends as an alternative to SMS text messaging. The app is free for the first year, and users must pay 99 cents a year after that.

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