Facebook Analysis : Facebook And Whatsapp- Acquisition Essay
On February 19, 2014, Facebook Inc. announced it is acquiring WhatsApp Inc. for $19 billion. Facebook, which was advised by Allen & Co, would pay $4 billion in cash, $12 billion in Facebook shares and $3 billion in restricted stock units to be granted to WhatsApp founders and employees that were to vest over four years subsequent to closing. WhatsApp Co-founder and CEO Jan Koum would join Facebook’s Board of Directors and WhatsApp would continue to remain autonomous and operate independently.
This transaction is the second biggest purchase of a company backed by venture capitalists (Exhibit 1). The $19 billion price tag is definitely aggressive; with many Wall Street analysts questioning the rationale behind the acquisition soon after the deal was announced.
Facebook is an online social networking service which was founded on February 4, 2004 by Mark Zuckerberg and his four Harvard classmates. The mission of Facebook is “To give people the power to share and make the world more open and connected. People use Facebook to stay connected with friends and family; to discover what 's going on in the world, and to share and express what matters to them.” Today, the Company has grown into one of the biggest social networking platforms and focuses primarily on creating value for people, marketers, and developers. In 2012, Facebook was valued at $104 billion, and by November 2015 its market capitalization has exceeded $298 billion.…