Facebook says it has completed its history making $19 billion acquisition of WhatsApp. This deal was planned back in February house over the course of a few days in February and sealed with a bottle of Jonnie Walker scotch.
Since then, WhatsApp has continued to run a completely independent operation, but the deal’s closing signifies the start of a gradual integration as legal and administrative support is given to the world’s largest mobile messaging service by Facebook.
The founders of WhatsApp, Jan Koum and Brian Acton, became billionaires last February when the company they had began five years prior was set to be purchased by Facebook for an exuberant $19 billion. The founders had maintained large stakes, having shunned most venture capital investments up till then. Koum still possessed around 45% at the time of the deal, which got the Ukrainian-born immigrant $6.8 billion and former Yahoo YHOO -3.63% engineer Acton received $3.5 billion after taxes. WhatsApp founder Jan Koum will now match Zuckerberg’s $1 salary and get a seat on the Facebook board.
WhatsApp’s shareholder so will be awarded 177.8 million shares of its Class A common stock and $4.59 billion in cash by Facebook, according to an SEC filing last weekend. WhatsApp’s employees will also receive 45.9 million shares (restricted stock units).
Luckily for those parties, Facebook’s shares are now valued higher than they were in February when the deal was announced, notes Re/code’s Peter Kafka, which makes the deal now worth about $21.8 billion.
After jumping through several regulatory hoops, on Friday, October 3, the final one was passed when the European Union gave it the go ahead.
In a few countries that have clear carrier billing systems and where credit card penetration is high, WhatsApp charges an annual subscription of $1 that generates yearly revenue of around $20 million, according to Forbes’ estimates. This is not nearly sufficient to substantiate a $19 billion price tag, so Facebook is surely exploring other ways the messaging service could make money.
With over 600 million active users monthly from Europe to South America to Asia, WhatsApp is the most globally diverse messaging service. Therefore, one way could be a service for money transferring in the increasingly globalized workforce.
It is well known that Facebook is interested in the field of money transfer. Forbes reported in April that Facebook had been working on a European-wide money-transfer and storage service since late 2013. PayPal CEO David Marcus was hired two months later as head of the company’s “Messaging Products.” Then last week a Stanford computer science student tweeted screenshots that showed Facebook had already implemented features of a payments infrastructure into place in Messenger for iOS, which is not activated yet.