For Facebook Inc. (Nasdaq: FB)if you can't beat 'em, buy 'em...
In its biggest acquisition yet, Facebook announced late Wednesday it's buying mobile messaging company WhatsApp in a $19 billion blockbuster deal.
The social networking leader will pay $4 billion in cash and $12 billion in stock for WhatsApp, a rapidly growing service that boasts some 450 million monthly users and is adding more than 1 million new users daily.
The agreement also includes an additional $3 billion in restricted stock to be granted to WhatsApp founders and employees that will vest over four years upon closing of the deal.
Many industry insiders balked at the hefty price tag. As TechCrunch pointed out, WhatsApp's employee headcount is a modest 50. At 32 engineers, that amounts to a whopping $500 million per engineer.
But, Facebook sees possibilities...
What Is WhatsApp?
Founded in 2009, WhatsApp allows unlimited instant messaging subscription service for Internet accessible smartphones including Google Android, BlackBerry, iPhone, Nokia, and Microsoft Windows phones. In addition to text messages, users can send images, video, and audio files.
For all phone types, WhatsApp is free to download for the first year. Then users can extend their contracts for $0.99 per year.
On June 13, 2013, the company announced via Twitter it had reached their new daily record by processing 27 billion messages, a 100% increase year over year. According to the Financial Times, WhatsApp "has done to SMS (short messaging services) on mobile phones what Skype did to international calling on landlines."
It is indeed a growing global hit.
Some 70% of WhatsApp 450 million users send messages daily via the app, and 44% use it at least once weekly. Meanwhile, the percentage of people using Facebook Messenger once a week is 35%, according to Datawrapper.