Facebook is
not waiting for its initial public offering to make its first big purchase.
In its
largest acquisition to date, the social network has purchased Instagram, the
popular photo-sharing application, for about $1 billion in cash and stock, the
company said Monday.
It’s a
notable move for Facebook, which has exclusively focused on bite-size
acquisitions, worth less than $100 million.
With
Instagram, Facebook will get a formidable mobile player – an area that is seen
as a weakness for the sprawling social network. Founded two years ago, the
service — which lets users share photos and apply stylized filters – has become
one of the most downloaded applications on the iPhone, with some 30 million
users. Instagram released a version of its application for Google’s Android
operating system last week.
On Monday,
both companies expressed their commitment to run Instagram as an independent
service.
In a post on
his profile page, Facebook’s chief Mark Zuckerberg said Instagram would
continue to work with rival social networks. That will allow users to post on
other services, follow users outside of Facebook, and to opt out of sharing on
Facebook.
“For years,
we’ve focused on building the best experience for sharing photos with your
friends and family,” Mr. Zuckerberg wrote. “Now, we’ll be able to work even
more closely with the Instagram team to also offer the best experiences for
sharing beautiful mobile photos with people based on your interests.”
In a separate
blog post on Instagram’s Web site, the company’s chief executive, Kevin
Systrom, also reiterated plans to preserve the service’s functionality and said
he looked forward to leveraging the new parent company’s resources and talent.
The
announcement comes as Facebook prepares for its highly anticipated initial
public offering, widely expected to take place next month.
Though
Facebook is known for smaller acquisitions, Instagram’s surging momentum likely
compelled the social network to swiftly put together a billion-dollar offer.
Last week, Instagram, which has just a handful of employees, closed a financing
round worth more than $50 million with several prominent investors, including
Sequoia Capital, an early backer of Google, Thrive Capital, the firm run by
Joshua Kushner, and Greylock Capital, an early investor of LinkedIn. AllThingsD
first reported last week that Sequoia was in the process of leading a $50
million round in Instagram.
That latest
funding round valued Instagram at about $500 million, according to one person
with knowledge of the matter, who requested anonymity because discussions were
private. Facebook’s purchase, one week later, means that investment has now
doubled in value.
The deal is
expected to close later this quarter, according to Facebook’s statement.
Here is the
news release from Facebook:
“Facebook
announced today that it has reached an agreement to acquire Instagram, a fun,
popular photo-sharing app for mobile devices.
“The total
consideration for San Francisco-based Instagram is approximately $1 billion in
a combination of cash and shares of Facebook. The transaction, which is subject
to customary closing conditions, is expected to close later this quarter.”
Mark
Zuckerberg, founder and chief executive of Facebook, posted about the
transaction on his Facebook page:
“I’m excited
to share the news that we’ve agreed to acquire Instagram and that their
talented team will be joining Facebook.
“For years,
we’ve focused on building the best experience for sharing photos with your
friends and family. Now, we’ll be able to work even more closely with the
Instagram team to also offer the best experiences for sharing beautiful mobile
photos with people based on your interests.
“We believe
these are different experiences that complement each other. But in order to do
this well, we need to be mindful about keeping and building on Instagram’s
strengths and features rather than just trying to integrate everything into
Facebook.
“That’s why
we’re committed to building and growing Instagram independently. Millions of
people around the world love the Instagram app and the brand associated with
it, and our goal is to help spread this app and brand to even more people.
“We think the
fact that Instagram is connected to other services beyond Facebook is an
important part of the experience. We plan on keeping features like the ability
to post to other social networks, the ability to not share your Instagrams on
Facebook if you want, and the ability to have followers and follow people
separately from your friends on Facebook.
“These and
many other features are important parts of the Instagram experience and we
understand that. We will try to learn from Instagram’s experience to build
similar features into our other products. At the same time, we will try to help
Instagram continue to grow by using Facebook’s strong engineering team and
infrastructure.
“This is an
important milestone for Facebook because it’s the first time we’ve ever
acquired a product and company with so many users. We don’t plan on doing many
more of these, if any at all. But providing the best photo sharing experience
is one reason why so many people love Facebook and we knew it would be worth
bringing these two companies together.
“We’re
looking forward to working with the Instagram team and to all of the great new
experiences we’re going to be able to build together.”
0 comments:
Post a Comment