Facebook said Wednesday that it would acquire WhatsApp, a messaging startup, for $16 billion in cash and stock, seeking to expand its reach among users on mobile devices.
The eye-popping price is Facebook’s largest acquisition by far and marks a new height in the frenzy to acquire popular technology startups.
Facebook will pay $4 billion in cash and $12 billion worth of Facebook shares for WhatsApp. An additional $3 billion in restricted stock units will be granted to WhatsApp employees and founders. These units will vest over the next four years.
“WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” Mark Zuckerberg, Facebook’s founder and CEO, said in a statement.
WhatsApp has more than 450 million monthly users, with 70 percent of those active on a given day.
Facebook, which acquired photo-sharing service Instagram for about $700 million in 2012, is counting on applications beyond its main social network to reach more users on smartphones and tablets. WhatsApp competes with Snapchat, which rebuffed a $3 billion offer from Facebook last year, and services from Twitter and Kik Interactive.
“Facebook is clearly taking out one of its main competitors,” said Paul Sweeney, a Bloomberg Industries analyst. “They are buying 450 million loyal users and an extraordinary growth story, but at a staggering cost.”
WhatsApp lets users send messages through its service on mobile devices based on different operating systems including Apple’s iOS, Google’s Android, Microsoft’s Windows Phone and BlackBerry’s software.
Unlike traditional text messages, WhatsApp is free for the first year, then costs 99 cents a year after that.
This report includes material from Bloomberg News.