Yesterday social media giant Facebook Inc. announced it is acquiring instant messaging app WhatsApp Inc. in a deal totalling US$19 billion – the sum of $12 billion in stock, $4 billion in cash, and additional $3 billion incentive for WhatsApp founders to join the Facebook board and stay there.
Facebook CEO Mark Zuckerberg announced on his own wall WhatsApp would continue to operate independently within Facebook:
So the first clear winner in the whopping deal are Whats app founders Jan Koum and Brian Acton. Koum is estimated by Forbes to own 45 per cent of WhatsApp and is an immigrant to Mountain View, Calif. from Kiev, Ukraine at the age of 16. The deal must have been especially sweet for Acton, who was turned down by Facebook in 2009 for a job. At the time, he and Koum were just getting WhatsApp off the ground as a mobile-based social network.
Facebook turned me down. It was a great opportunity to connect with some fantastic people. Looking forward to life's next adventure.
— Brian Acton (@brianacton) August 3, 2009
The second winner, and not so clear cut, is Waterloo, Ont.-based BlackBerry Ltd. which saw its stock surge nine per cent after news of the Facebook acquisition. Why? BlackBerry Messenger, that’s why. Known simply as BBM by its users, the real-time messaging app has long served the same purpose as WhatsApp – real-time messaging with message status indicators showing delivered or read – and just last year was rolled out to popular mobile platforms Android and iOS.
So with a huge valuation for one real-time messaging app, many are betting BlackBerry’s own app must also be valuable. The irony is that last year, BlackBerry openly put itself on the market and had many suitors for an acquisition, only to come out of a restructuring with a moderate investment from shareholder Fairfax Financial.
While WhatsApp is said to have 450 million users that pay $1 per year for the service, BBM has 80 million users and it is free. According to Reuters, an analyst values BBM at $240 million – though that was on Tuesday, prior to the WhatsApp news.
Still, BlackBerry hasn’t indicated it is looking to sell off its asset, which is becoming more crucial to its business in the face of declining handset sales.