Facebook Inc. (NASDAQ:FB) bid of $16.9 billion for WhatsApp earlier in the year was criticized for being extremely high, for a startup that had not proven itself to the liking of investors. Just when the dust was settling down came the bombshell that that the total acquisition price could have soared to $21.8 billion in a matter of 8-months.
Facebook Inc. (NASDAQ:FB) opted to pay a greater chunk of the agreed price with stock instead of cash. At the time Facebook Inc. (NASDAQ:FB) was in talks with WhatsApp, its stock was trading at the $68 mark but has since ballooned to highs of $70. Regulatory approval prevented Facebook from sealing the deal at the time when its stock was trading at the $68 mark.
A total of 184 million Facebook Inc. (NASDAQ:FB)’s Class A common stock was offloaded to WhatsApp, which were at the time valued at $12.5 billion. The issuance of the Class A shares essentially allowed CEO, Mark Zuckerberg, not to dilute his controlling stake in the giant social company.
Facebook Inc. (NASDAQ:FB) also agreed to chip in an additional 46 million restricted stock units that were to compensate WhatsApp employees. WhatsApp CEO and co-founder, Jan Koum, is reported to have received 50% of the restricted stock units closing in one of the most extraordinary payouts of all time. Additional $3.6 billion was later paid as incentives to lure WhatsApp employees to merge with the giant social company taking the acquisition price to $19.6 billion.
The deal officially closed on October 6 at a time when Facebook Inc. (NASDAQ:FB) was trading at $77.56 a share, meaning WhatsApp had gained an additional $9.56 from the agreed deal of $68 a share. The result is that WhatsApp final valuation has risen to $21.8 billion, up by $2 billion in a matter of eight months.
It is not the first time that Facebook Inc. (NASDAQ:FB) is finding itself in such a tricky situation financially with acquisitions. A similar incidence occurred with the acquisition of Oculus as it was forced to add a few hundred-millions on an agreed deal after its stock appreciated by more than 15% within the regulatory approval period.
Ken Griffin‘s Citadel Investment Group holds 4.58 million shares worth $307.87 million of Facebook Inc. (NASDAQ:FB).