Facebook mega-deal for WhatsApp

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Facebook mega-deal for WhatsApp

Facebook mega-deal for WhatsApp

Facebook’s $19-billion deal for the mobile messaging service WhatsApp is a savvy strategic move by the world’s biggest social network, even if the price tag is staggeringly high, analysts say. The agreement unveiled is seen as the largest for a venture-backed tech startup, gives Facebook entry into emerging markets and importantly keeps the free-messaging app out of the hands of rivals such as Google.
“Although the deal appears to be pricey… we think that it has compelling strategic logic,” Shebly Seyrafi at FBN Securities said. While Facebook is paying a high price by any measure, Seyrafi said “we see other benefits to the deal,” pointing out WhatsApp’s big user base in countries such as Brazil, South Africa and China.
Facebook shares shook off early declines and rose 2.3 per cent to close at $69.63, despite the fact that the company is diluting its value with the massive cash-and-stock acquisition. The purchase includes $12 billion in Facebook shares and $4 billion cash. It calls for an additional $3 billion in restricted stock units to be granted to WhatsApp founders and employees that will vest over four years.

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