Facebook announces WhatsApp purchase

Social networking site Facebook has confirmed it has completed the purchase of instant messaging service WhatsApp in one of the biggest acquisitions in recent history.

Facebook has agreed to complete a deal worth a total of $19 billion (£11.4 billion) in cash and shares for the company, which employs just 50 people in Mountain View in the US.

Facebook founder Mark Zuckerberg described WhatsApp's services as "incredibly valuable" in a statement announcing the acquisition. WhatsApp allows users to send messages and images for free and is popular with young people all over the world, a demographic that Facebook is keen to expand into in the coming years.

WhatsApp co-founder Jan Koum, who will become a member of Facebook's board of directors, said in a conference call after the deal was announced that he planned to operate the firm "independently and autonomously".

Revenues

There are no advertisements on WhatsApp – users instead pay to download the app to the smartphones – and the founders of the firm have insisted it will stay this way even now the firm is owned by Facebook, which makes most of its money from ads.

"We're excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world," Mr Koum, who is believed to be worth over $6 billion as a result of the deal, said in a statement.

Cathy Boyle, a senior analyst at research firm eMarketer, told BBC News that one of the reasons WhatsApp was so attractive for Facebook was the fact it is big in European markets and has a young audience – exactly the market the social network is looking to target. "WhatsApp actually has greater penetration in a lot of international markets than Facebook," she said.

Ben Bajarin, from California-based technology consultants Creative Strategies, added that WhatsApp is currently growing at a much faster rate than Facebook and is now well on track to reach a billion worldwide users.

Facebook stocks fell 2.67 per cent in after-hours trading in the US after the deal was announced.

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