Facebook buys popular massaging service Whatsapp for $16B

Facebook said Wednesday that it has agreed to acquire WhatsApp in a $16 billion cash and stock arrangement with the popular messaging application's parent company. The announcement was made in a filing with the Securities and Exchange Commission. As WhatsApp is a 55-person company, Facebook is basically acquiring each employee for $345 million. Facebook shares dropped 5% after the announcement.

According to Pursuitist, Mark Zuckerburg adds: “I’ve also known Jan for a long time, and I know that we both share the vision of making the world more open and connected. I’m particularly happy that Jan has agreed to join the Facebook board and partner with me to shape Facebook’s future as well as WhatsApp’s.”

It is Facebook's biggest acquisition and comes less than two years after the California-based Internet star raised $16 billion in the richest tech sector public stock offering.

WhatsApp has 450 million monthly active users, more than 70 percent of whom are active on a daily basis, Facebook said in a press release. The service is also adding 1 million new registered users per day. The application will, much like Instagram, remain independent from its new parent company.

The deal came from a chat Zuckerberg had with WhatsApp co-founder Jan Koum, whom he described as a "valuable thought partner" and friend of many years.

"Last Sunday evening, about 11 days ago, I proposed if we joined together that would help us really connect the rest of the world," Zuckerberg said.

"He thought about it over the course of the week, came back and said he was interested."

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.

According to CNET, The network gives Facebook an important asset as it seeks to conquer the rest of world and maintain high engagement rates, but WhatsApp won't become another channel for ads -- at least, according to founder and CEO Jan Koum, who will also be joining Facebook's board of directors.

"You can continue to use WhatsApp no matter where in the world you are, or what smartphone you're using," Koum said. "And you can still count on absolutely no ads interrupting your communication. There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product."

Facebook will host a 30-minute conference call to discuss the acquisition at 3:00 pm PT / 6:00pm ET today. The dial-in number for the call is (866) 751-3284 (toll free) and (973) 935-8772 (international), conference ID: 2907041. The live webcast of the call can be accessed at the Facebook Investor Relations website at investor.fb.com. Facebook uses the website http://investor.fb.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.