Facebook’s $19 billion (R210 billion) WhatsApp buy has made history as the largest acquisition made by an Internet company – and makes the global chat app worth more than South Africa’s largest mobile operator, Vodacom.
At R210 billion, the WhatsApp deal is worth more than the total market capitalisation of Vodacom – which is currently at around R177 billion.
The messaging app is also worth more than half of MTN’s market capitalisation (R376 billion) and just under half of the value of SA’s biggest media and Internet company, Naspers (R530 billion).
WhatsApp currently has 450 million monthly users, with 310 million active daily users. According to Facebook, its messaging volume is approaching the entire global telecom SMS volume; and the app is adding more than 1 million new registered users per day.
“WhatsApp is on a path to connect 1 billion people. The services that reach that milestone are all incredibly valuable,” said Facebook founder and CEO Mark Zuckerberg, in a press release announcing the acquisition.
Vodacom meanwhile, has 56.0 million group customers, while MTN reported a subscriber base of 203.8 million across 21 territories in a quarterly update for the nine-month period ended September 2013.
Biggest Internet company acquisition
While the acquisition of WhatsApp is a far stretch from the biggest buy in the tech sector – a crown currently held by Vodafone Group’s massive $185.1 billion bid for Mennesmann in 2000 – it has far surpassed Google as the top Internet company willing to fork over big bucks for business.
In 2012, Google spent $12.5 billion on mobile phone maker, Motorola, and a plethora of patents – a business that was passed along to Lenovo early in 2014, when the Internet giant sold the handset maker (but not its patents) for a ‘cool’ $2.9 billion.
WhatsApp’s $19 billion price tag – made up of $4 billion in cash, $12 billion in Facebook stock and a further $3 billion in reserved stock – puts the message app at the top of the list of most expensive applications and instant messaging tools.
Previously, Microsoft’s acquisition of Skype in 2011 for $8.5 billion held that crown.
This is not Facebook’s first jarring step into acquisitions – the world’s largest social network made waves in 2012 by purchasing photo-filter hipster-friendly social network, Instagram, for $1 billion.
Tech’s largest acquisitions
|Verizon||Verizon Wireless||$130 billion||2013|
|Bell Atlantic||GTE||$71.1 billion||1998|
|Comcast||AT&T Broadband||$76.1 billion||2001|
|Hewlett -Packard||Autonomy||$10.2 billion||2011|
|Oracle||Sun Microsystems||$7.4 billion||2009|
|Western Digital||Hitachi||$4.8 billion||2011|
|Lenovo||IBM server unit||$2.3 billion||2014|
|Oracle||Acme Packet||$2.1 billion||2013|
|ITA Software||$676 million||2010|
|DeepMind Technologies||$650 million||2014|
Closer to home, Vodacom is also in the process of spending some big money on local acquisitions, with the operator in talks to by Neotel for a reported figure of R10 billion.
Discussions between the two parties are said to be close to conclusion, according to an analyst, who says that the next step would be a trip to the Competition Commission and regulatory.