FT / Facebook’s bill for WhatsApp climbs to $21.8bn

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SHAFAQNA –  Facebook‘s acquisition of WhatsApp Messenger has ended up being even more expensive than it originally thought. The social network’s largest deal to date closed on Monday, after receiving regulatory approval in Europe last week. The final combination of cash, stock and management incentives that Facebook is paying for the wildly popular chat app now totals $21.8bn. That figure is above the $19bn stated when the deal was first announced, because Facebook’s share price has risen more than 13 per cent since mid-February to $77.29 on Monday.

Over the same period, WhatsApp’s usage has continued to grow rapidly.

The number of people using the mobile messaging app every month has increased from more than 450m in February to above 600m in August.

“We are looking forward to connecting even more people around the world, and continuing to create value for the people who use WhatsApp,” Facebook said in a statement.

The deal is comprised of 177.8m Class A shares, worth $13.7bn on Monday, and a further $3.5bn worth of restricted stock units awarded to WhatsApp employees. The remaining $4.59bn was paid in cash.

Jan Koum, WhatsApp’s co-founder and chief executive, received nearly 25m restricted stock units as part of the deal, worth $1.9bn on Monday. Mr Koum, who also joins Facebook’s board, will receive an annual base salary of $1 and will not be eligible for any bonuses beyond the stock grant, which will vest in tranches over four years.

In approving the deal, the European Commission said last week that Facebook and WhatsApp were “not close competitors” and that “most people use more than one communications app”.

Nonetheless, Facebook’s own standalone chat app, Messenger, has topped app store charts in recent weeks, despite angry reviews from users who were forced to download it after the messaging feature was removed from the social network’s main app.

Since Facebook announced its acquisition of WhatsApp, the chat app market has seen a string of deals.

Last week, it emerged that Snapchat was in advanced talks with Yahoo over an investment that would value the photo messaging app at around $10bn.

Alibaba invested $215m in Tango in March, valuing the US app at $1bn, while South Korea’s KakaoTalk merged with Daum in a deal worth $3bn in May.

Naver’s Line, an app popular in Asia, said in June that it hoped to go public in Japan or the US. However, last month it said that it would postpone any listing decision until next year.

Ahead of the WhatsApp deal, February saw Japanese ecommerce group Rakuten acquire Viber for $900m.

In an attempt to fend off this growing competition around the world, WhatsApp said in February that it plans to introduce voice calling to its app, though the feature has not yet been widely introduced.

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