Acquisition of WhatsApp by Facebook: A Calculated Risk?





Case Details Case Introduction 1 Case Introduction 2 Case Excerpts

Abstract

The case is about the US-based social networking giant Facebook’s acquisition of WhatsApp, the world’s most popular mobile instant-messaging platform. It discusses the landmark deal to buy WhatsApp for US$ 19 billion including US$4 billion in cash, US$12 billion worth of shares, and an additional US$3 billion in restricted stock units of Facebook over four years after the deal closed. On April 10, 2014, the Federal Trade Commission (FTC) cleared the deal.

The case also includes the journey of WhatsApp into the most popular instant-messaging app. The WhatsApp Messenger is a cross-platform mobile messaging app which allows users to exchange messages without having to pay for SMS. Apart from simple text messaging, users can send images, video or audio messages. After their first trial year of using the service, users need to pay subscription charges of US$ 0.99.

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Issues

The case is structured to achieve the following teaching objectives:

  • Understand the growth strategy adopted by Facebook to maintain its dominant position in the social marketing space;
  • Understand the issues and challenges faced by Facebook in recent years in terms of competition from other social media companies;
  • Study and analyze the Facebook-WhatsApp deal;
  • Assess the challenges the deal could face in future and how these can be overcome.

Contents
Introduction
About Facebook
About WhatsApp
Acquiring WhatsApp
Challenges
The Road Ahead
Exhibit

Keywords

Growth strategy; Mergers and Acquisitions; Competition; Business Strategy; Managing Networked Businesses; Social networking; Social media; Mega deals; Valuation; Synergies; Creating value; Facebook; Whatsapp

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