Facebook to buy WhatsApp for $19B

Facebook announced on Wednesday plans to purchase the fast-growing mobile-messaging startup WhatsApp for $19 billion in cash and stock, as the world's largest social network looks for ways to boost its popularity, especially among a younger audience.

Facebook confirmed that it will pay $12 billion in Facebook stock and $4 billion in cash for WhatsApp. The social network will also grant $3 billion worth of restricted stock units to WhatsApp’s founders. That stock will vest over four years after the deal closes.

The deal translates to roughly 9 percent of Facebook's market value and is bigger than any acquisition made by Google, Apple or Microsoft.

Google's largest purchase, Motorola Mobility, was for $12.5 billion, while Microsoft's biggest buy was Skype for $8.5 billion. Apple hasn't made any acquisitions valued over $1 billion.

The purchase of WhatsApp, one of the world’s most popular messaging services with more than 450 million users, stunned many Silicon Valley observers with its lofty price tag. But it underscores Facebook's determination to win the market for messaging, an indispensable utility in a mobile era.

The acquisition makes sense for 10-year-old Facebook as it looks to attract its next billion users while keeping its existing 1.23 billion members interested.

Combining text messaging and social networking, messaging apps provide a quick way for smartphone users to trade everything from brief texts to flirtatious pictures to videos — bypassing the need to pay wireless carriers for messaging services.

It also helps Facebook tap teens who eschew mainstream social networks for WhatsApp and rivals such as Line and WeChat, which have exploded in size as mobile messaging takes off.

"People are calling them 'Facebook Nevers,'" said Jeremy Liew, a partner at Lightspeed and an early investor in Snapchat, another hot messaging company that flirted last year with a multibillion dollar acquisition offer from Facebook.

WhatsApp is adding about a million users per day, Facebook co-founder and Chief Executive Officer Mark Zuckerberg said Wednesday.

"WhatsApp will complement our existing chat and messaging services to provide new tools for our community," he wrote on his Facebook page. "Since WhatsApp and (Facebook) Messenger serve such different and important users, we will continue investing in both."

Facebook says it is keeping WhatsApp as a separate service, just as it did with Instagram, which it bought for about $715.3 million two years ago.

The deal to purchase WhatsApp is expected to close later this year.

Wire services