Social networking site Facebook announced that it has acquired mobile messaging app WhatsApp for a total of $19 billion in a major deal that is expected to grow the social network’s reach to young users.
Under the deal, Facebook will pay $4 billion in cash and approximately $12 billion worth in shares. The agreement also provides for an additional $3 billion in restricted stock units that will be given over four years subsequent to the deal closing.
Started five years ago, WhatsApp now has 450 million monthly users, and says it currently adds more than one million new registered users per day.
The company claims it is against advertising on the platform, and charges users an annual subscription fee of $1 after the first year.
In a statement, Facebook said that the combination will help accelerate growth and user engagement across both companies.
“WhatsApp is on a path to connect one billion people,” said Mark Zuckerberg, Facebook founder and CEO.
“The services that reach that milestone are all incredibly valuable.”
Jan Koum, WhatsApp co-founder and CEO, said, “WhatsApp’s extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide.”
Koum will now join Facebook’s board of directors.
Facebook also asserted that WhatsApp’s brand will be “maintained” and that its messaging product and Facebook’s existing Messenger app will continue to operate as standalone applications.
The social networking site is rapidly snapping up smaller companies as it aims to expand its offering. In 2012, Facebook spent $1 billion to buy photo sharing service Instagram.
Experts say the move will also help Facebook grow its reach among younger users, who are increasingly opting for instant messaging apps over social networks.
Facebook was advised by Allen & Company and Weil, Gotshal & Manges and WhatsApp was advised by Morgan Stanley and Fenwick & West.