Facebook’s $19bn WhatsApp grab just cost it $22bn

Chris Davies - Oct 6, 2014, 2:56 pm CDT
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Facebook’s $19bn WhatsApp grab just cost it $22bn

The ink is finally dry on Facebook’s acquisition of WhatsApp, and what a difference six months make, with the messaging app costing Mark Zuckerberg & Co. $3bn more than expected when first announced. Facebook had planned on splashing $19bn – made up of a combination of shares, restricted stock units, and cash – on its grab for the popular IM platform, but a surge in the social site’s own value in the intervening period meant the cost was actually much higher than planned.

In total, Facebook will hand over around $4.59bn in cash for WhatsApp. There are also just shy of 178m Class A shares, and in total approximately $3.5bn in restricted stock units which will be shared among WhatsApp staff.

As for WhatsApp co-founder and CEO Jan Koum, he takes nearly 25m restricted Facebook stock units on his own, a haul worth around $1.9bn. Koum will stick around post-acquisition, joining Facebook’s board.

However, he won’t get a huge salary. Instead, like Mark Zuckerberg, he’ll earn just $1 per year; in addition, he will not be eligible for any Facebook bonuses.

Zoum’s payout will instead come in stages over the next four years, as his stock units vest.

Facebook’s acquisition came under close scrutiny, with the European Union taking several months to decide whether the deal could be considered anti-competitive. The final decision came late last week.

Then, competition policy chief Joaquín Almunia said that the instant messaging space was simply too competitive for Facebook buying WhatsApp to be deemed against the public interest, despite the popularity of each. Messaging users generally spread their attentions across clients and platforms, Almunia pointed out, considering Facebook and WhatsApp not to be direct competitors.

SOURCE Facebook SEC filing


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