How Facebook has come to pay 22 billion for an app

How Facebook has come to pay 22 billion for an app
    How Facebook has come to pay 22 billion for an app
    SOCIAL NETWORK - As the amount of the transaction was initially valued at $ 19 billion, the acquisition of Facebook by WhatsApp ultimately cost $ 21.9 billion, or € 17.4 billion. 

    If one were to compare the value of the WhatsApp application to a French company, it would give the example of Carrefour, whose market capitalization is currently around EUR 17.37 billion. Quite a sum close to that Facebook is preparing to pay to buy the WhatsApp application, since the final amount of the transaction was set at 17.5 billion euros (22 billion dollars). The difference is that Carrefour was founded in 1959 and employs 365,000 people around the world. WhatsApp was founded in 2009 and has ... 55 employees. Why so much? Explanations. 

    ► A successful application 

    If WhatsApp is only five years old, she did not wait until the age of reason to find worldwide success. The application has 450 million users. The instant messaging service for smartphone allows two people who have downloaded the app to communicate anywhere in the world (and free WiFi or via their 3G / 4G subscription). Calls, messages, audio notes, photos, videos ... the app is free the first year and costs € 0.89 / year. That is his only source of income, the app does not host no ads. 

    ► A strategic acquisition 

    But why Facebook needed to spend as much as it has its WhatsApp offers instant messaging, Messenger? Mark Zuckerberg, CEO of the social network, is was said in February: "WhastApp is a mobile messaging service, simple and reliable [...] Every day, more than 1 million people sign on. WhatsApp and soon it will be over a billion people will use it. "Facebook founder ensures that the service will remain independent and will coexist with Messenger. Also, buy WhastApp, is to ensure that competition in the Google case will not hand over this application. 

    ► A bet on the future for analysts 

    Shel Israel, regular contributor to the site, says Mark Zuckerberg has a long-term vision. This ensures that, in the future, much of the population will rise primarily by Facebook platform to engage their conversations. And then, after all, with a market capitalization of more than $ 200 billion, if Facebook spends 22 billion for a promising service is certainly a gamble but that does not jeopardize the firm. 

    ► Why $ 21.9 billion and not 19? 

    In mid-February, at the announcement of the acquisition of WhatsApp, the price is raised 19 billion dollars (15 billion euros). Monday, October 6, at the closing of the acquisition, the amount was revalued by 3 billion. Blame the stock market fluctuations: in the meantime, as WhatsApp has appreciated by 14%. The sum will be paid in this way 4.59 billion in cash and 223.7 million shares (about 17.3 billion dollars).
    Wael Elyamani
    @Posted by
    writer and blogger, founder of CTV Egypt News .

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