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Facebook shares head south after $19bn WhatsApp deal

Anna Fedorova
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Anna Fedorova

Facebook’s share price fell as much as 5% in after-hours trading as the company announced a deal to buy chat application WhatsApp for some $19bn.

The group agreed to pay a total of $19bn (£11.4bn) in cash and stock for the transaction in its single largest acquisition.

Of this, $4bn is in cash and $12bn in stock, while WhatsApp will also be granted an additional $3bn in restricted stock units.

The scale of the transaction dwarfs the $1bn Facebook paid for photo-sharing app Instagram last year, and was met with shock by some analysts.

As a result, Facebook’s shares fell from a closing price of $68.06 to $64.70 in after-hours trading on the NASDAQ, according to Reuters, but later recovered to $66.24 – a drop of 2.7%.

Facebook said it would use the acquisition to tap into the quickly growing market for mobile messaging, noting that WhatsApp claims to have 450m active monthly users and is adding around one million new users per day.

Under the purchase agreement, the social network has pledged to keep the messaging brand and service unchanged, and is offering a break-up fee equivalent to $2bn if the deal falls through.