Facebook - WhatsApp Acquisition

ByMohit SrivastavaMohammed SaquibAkash Mahamana

Jan KoumCEO of WhatsApp

Mark ZuckerbergCEO of Facebook

Acquisition

A corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own. Acquisitions are often paid in cash, the acquiring company's stock or a combination of both.

Facebook recent acquisitions• Instagram in 2012 worth $1 billion• SnapTu in 2011 worth $70 million

WhatsApp

Founded Feb 24 2009

Founder Jan Koum

Stable Release iOS – Version 2.11.7

Windows – 2.11.356.0

Blackberry – 2.11.529

Android – 2.11.152

Operating System iOS, Android, Blackberry, Nokia Series 40, Symbian, Windows, Nokia Asha

License Proprietary

Facebook

Founded Feb 4 2004

Founder Mark Zuckerberg, Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, Chris Hughes

Revenue US$7.872 billion

Operating income US$2.804 billion

Net income US$1.5 billion

Users 1.23 billion (monthly active)

Value of the Deal

• WhatsApp is being Acquired for $19 billion

• It includes - USD 4 billion in cash

- USD 12 billion worth of Facebook shares - USD 3 billion in restricted stock units

• Jan Koum to join board of directors of facebook

Why Acquisition• MAU (monthly active users) will ramp up to 1 billion by 2019

• Gives it additional leverage over Twitter in the battle for more direct messaging market share.

• WhatsApp’s function will make it a near-essential add-on to smartphones, and this—combined with smartphone user growth as well as user behaviour that’s shifting more and more towards mobie.

 • This will help Facebook to diversify its revenue sources away from

the U.S.

SWOT Analysis

Strengths• Loyal customers• Market share leadership• Group Chat• Avaialable for all platforms• Diversify• Free voice calls

Weakness• Not diversified, because other applications offers the same

service and also function as social media• To access the account can only be paid by credit card only• Only works with a data plan or wifi

Oppurtunities• Continued development of technology platforms• Advanced technology• Recognized application• Modernization of people• Increased demand for smartphones

Threats• Competitors like Wechat, Viber, Tango, Skype, Line• Product substitution• Similar applications and free

• WhatsApp to add voice call to its product in second half of this year.

• Two privacy groups filed a complaint with the Federal Trade Commission to block Facebook's $19 billion acquisition of messaging service WhatsApp. The groups want Facebook to provide more insight into how it intends to use data from the app's 450 million users.

Present Status

http:/ /www.insidefacebook.com/2014/02/25/what-others-are-saying-about-facebooks-acquisi t ion-of-whatsapp/

http:/ /www.huff ingtonpost.com/quora/why-did-facebook-acquire_b_4875055.html

http:/ / f inance.yahoo.com/news/must-know-facebook-acquires-whatsapp-162740629.html

http:/ /www.informationweek.com/software/social / facebooks-whatsapp-deal-under-fi re/d/d-id/1114183

http:/ /www.forbes.com/si tes/adamhartung/2014/02/24/zuckerbergs-3-smart- leadership-lessons-from-facebook-buying-whatsapp/

http:/ /edi t ion.cnn.com/2014/02/21/opinion/wolf-facebook-whatsapp/ http:/ / indianexpress.com/art ic le/business/world-market/facebook-to-acquire-

whatsapp-for-usd-19-bi l l ion-in-cash-and-stock-deal/

http:/ /sequoiacapital . tumblr.com/post/77211282835/four-numbers-that-explain-why-facebook-acquired

http:/ /marketreal ist .com/2014/02/facebook-acquires-whatsapp-19-bi l l ion / http:/ /

t imesofindia. indiat imes.com/tech/tech-news/software-services/WhatsApps-f irst-new-feature-under-Facebook-Voice-cal ls/art ic leshow/30951210.cms

Reference

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