Major Acquisitions by Facebook

B. Rajesh Kumar
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B. Rajesh Kumar: Institute of Management Technology

Chapter 39 in Wealth Creation in the World’s Largest Mergers and Acquisitions, 2019, pp 321-327 from Springer

Abstract: Abstract Facebook have acquired 66 companies. The largest acquisition was WhatsApp messenger acquisition. Other notable acquisition of Facebook includes that of Instagram and Oculus virtual reality. During April 2012, Facebook acquired mobile photo-sharing app Instagram for approximately $1 billion in cash and stock. In 2014, Facebook acquired Oculus VR, the leader in immersive virtual reality technology for $2 billion. Facebook acquired Oculus with the strategic aim to extend Oculus’ existing advantage in gaming to new verticals which included communications, media and entertainment, education, and other areas. WhatsApp was acquired by Facebook in the year 2014. The deal was valued at $19 billion. WhatsApp continued to run its operation completely independent since its acquisition. Facebook kept WhatsApp as a separate service just as it did with Instagram. The acquisition of WhatsApp bolstered Facebook’s strong position in the messaging arena. Facebook’s a standalone messaging app for mobile devices was second only to WhatsApp with respect to its share of the smartphone market. As a part of the deal, Facebook paid WhatsApp $4 billion in cash and $12 billion in stock. The acquisition gave Facebook the most popular messaging service in the world. The acquisition boosted Facebook’s access to emerging markets like India and Mexico. India was WhatsApp’s biggest customer base with more than 40 million active users. The cumulative return analysis for Facebook stock was done for 1-year period surrounding the acquisition window period (10/2/2014–10/2/2015). The analysis was done for the time window of 251 days (−5 to +245 interval). The cumulative return during the period was 19.87%.

Keywords: Immersive Virtual Reality Technology; Instagram; Notable Acquisitions; Messaging App; Facebook Paid (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/978-3-030-02363-8_39

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