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Facebook bets big with US$19 bil. app deal

SAN FRANCISCO -- Facebook is betting huge on mobile with an eye-popping cash-and-stock deal worth up to US$19 billion for Internet Age smartphone messaging service WhatsApp.

The surprise mega-deal announced Wednesday bolsters the world's biggest social network — which has more than 1.2 billion members — with the 450-million-strong WhatsApp, which will be operated independently with its own board.

It fits with Facebook founder Mark Zuckerberg's focus on being at the center of lifestyles in which billions of people around the world share whatever they wish over the Internet using smartphones or tablets.

“Facebook works harder than any other social site to keep people coming back,” said Forrester analyst Nate Elliott.

“In the past year, they've focused much of that effort on mobile — introducing Home and Paper, and upgrading both their Facebook and Messenger apps — and this is another step towards keeping people engaged no matter where they are.”

Facebook promised that WhatsApp would remain independent and said it served a real-time communication need, while Messenger was used more in the style of email between members of the social network.

WhatsApp is ideally suited to young people who increasingly prefer rapid-fire smartphone messaging to making calls or churning out email. Facebook has been eager to keep the devotion of young users who set trends and carry tech habits into the future.

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

Zuckerberg said that WhatsApp — a cross-platform mobile app that allows users to exchange messages without having to pay telecom charges — was worth the steep price because its blistering growth around the globe has it on a clear path to hit a billion users and beyond.

“Services with a billion people using them are all incredibly valuable,” Zuckerberg said while discussing the purchase price during a conference call with analysts.

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.”

Silicon Valley-based WhatsApp started the year with 50 employees, most of them engineers, and the startup said that all of its stakeholders have approved the take-over.

The purchase includes US$12 billion in Facebook shares and US$4 billion in cash. It calls for an additional US$3 billion in restricted stock units to be granted to WhatsApp founders and employees that will vest over four years.

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