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$19 billion Deal
Deal prices WhatsApp at more than half of its market value
Fears it could lead to new dot-com bubble
Facebook is paying projected revenue multiple of 19, numbers only seen in pharmaceutical companies developing life saving drugs
: Combination of two companies to form a new company
: Purchase of one company by another, No new company formed
Common Goal: to create
Mergers and Acquisition
Mergers & Acquisitions
Facebook & Whatsapp
Is $19 billion worth it?
More potential issues
Decline in young teenage users
Facebook is losing its' dominance in the youth market
More parents joining Facebook = Loss of teenagers towards messaging apps
Younger generation shifting towards mobile messaging apps such as Snapchat, WhatsApp and Instagram
Facebook vs Whatsapp
Market Cap = $120.55bn
Revenue = $7.9bn
Net Income = $1.5bn
Market Cap = N/A
Revenue = $ ???
Net Income = $ ???
Facebook acquired WhatsApp for $19 billion
Largest internet acquisition in over a decade
Diversifying portfolio following acquisition of Instagram for $1 billion
Some commentators have suggested that Facebook has overpaid and overvalued its' deal with WhatsApp
Benefits of Acquisition
However Facebook directors believe this to be a long term investment
Justifying its acquisition based on synergies
2. Increasing Market Reach
Allows Facebook to tap into a market they are losing their dominance
Potential to increase Facebook's revenue and earnings
Further diversify its portfolio into increasingly popular mobile messaging apps
Purchase could be the future of Facebook
Not its' first purchase at trying to acquire a competitor
Facebook attempting to spread its control over different forms of social network
WhatsApp and Viber becoming increasingly popular in developing nations
Facebook potentially could receive higher earnings and revenue from this acquisition
1. Monopolistic Gain
Increase their lead as the powerhouse of social media
Achieve its goal of 'connecting everyone'
"magic force" that allows for enhanced cost efficiencies
Revenue enhancement and cost savings
Benefits from merging & acquiring:
Economies of scale
Improved market reach