whatsappFacebook announced today it is acquiring the popular WhatsApp messaging service for $12 billion in stock and $4 billion in cash. The deal also includes $3 billion in restricted stock units for WhatsApp’s employees.

WhatsApp, which employs just 55 people, has more than 450 million monthly users — 100 million of which have joined the service in the past four months. That’s a significant amount more than Twitter (241 million users).

[Follow-up: Why Facebook would spend $16 billion on an app with no advertising]

The app is fairly simple, allowing users to send individual or group text, video, photo and audio messages to one another. It is free to use for one year, then 99 cents every year thereafter. There are no ads.

This is Facebook’s biggest acquisition to date. It was just two years ago when the social network acquired Instagram for $1 billion.

“Our mission is to make the world more open and connected,” wrote Facebook CEO Mark Zuckerberg. “We do this by building services that help people share any type of content with any group of people they want. WhatsApp will help us do this by continuing to develop a service that people around the world love to use every day.”

Zuckerberg noted that WhatsApp will continue to operate independently and will complement Facebook’s existing chat and messaging services. The company will remain in its Santa Clara headquarters. WhatsApp co-founder and CEO Jan Koum will join Facebook’s Board of Directors.

facebook212In a blog post, Koum reiterated that the business will remain independent.

“Here’s what will change for you, our users: nothing,” he wrote.

“Facebook Messenger is widely used for chatting with your Facebook friends, and WhatsApp for communicating with all of your contacts and small groups of people,” Zuckerberg wrote. “Since WhatsApp and Messenger serve such different and important uses, we will continue investing in both and making them each great products for everyone.”

WhatsApp took only $8 million in financing from Sequoia Capital in 2011. Sequoia’s Jim Goetz has a nice write-up here explaining why Facebook acquired WhatsApp.

“WhatsApp has done for messaging what Skype did for voice and video calls,” Goetz wrote. “By using the Internet as its communications backbone, WhatsApp has completely transformed personal communications, which was previously dominated by the world’s largest wireless carriers.”

Facebook’s stock is down 4.5 percent in after hours trading.

Here’s the press release from Facebook and the SEC stock filing. In honor of today’s acquisition, let’s all enjoy a Wednesday afternoon laugh with this great Budweiser commercial:

Comments

  • guest

    Sounds like a ‘very’ defensive purchase

  • http://twitter.com/chrisamccoy Chris McCoy

    Just imagine what can be built on top of and distributed through a network of 450MM+ mobile users around the globe.

    We’re in the early days of social and interest connections.

    These are our new distribution, discovery, and content creation overlords.

    A good deal for Facebook.

  • Guest

    Congrats to WhatsApp on a successful exit! This is great news for our entire region.

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