¶ … Internet research a publicly traded company United States undergone a merger acquisition (3) years. Take note circumstances surrounding merger acquisition. Write a (4-6) page paper: 1. Examine circumstances resulted merger acquisition selected company.
In February 2014, Facebook announced the conclusion of a deal to purchase leading messaging service WhatsApp, in a deal worth $19 billion, with $4 billion in cash (CNBC, 2014). The deal is considered one of the biggest in the IT industry, rivaling the acquisition of Compaq by HP, for example. It is also Facebook's biggest acquisition to date. Given the price of the acquisition and the fact that the acquired company is relatively new (it has been operational for about 5 years) and employs only around 50 people (Panzarino, 2013), questions about the motivation behind the deal are obvious.
There are several reasons that motivated the acquisition. First, as Hartung (2014) pointed out, success on the market is closely linked to maintaining relevancy. What this means is that a company needs to continuously stay in touch with the changes and developments on the market, particularly in terms of customer preference. It needs to innovate and propose new service to match these customer requirements. Sometimes, it cannot do this exclusively internally.
For example, Facebook realized the need to transform its social networking platform and make it more adapted to mobile devices, as the market required. This also meant creating instant messaging services, which it did, but not as successfully as WhatsApp. It made more sense to acquire a company that was already established in this market and that had a large number of consumers.
This links well to the second reason behind the merger: what Facebook acquired. Other than a relatively low number of employees (the price paid came to $550 million per engineer, as Panzarino (2013) showed)), it brought 350 million established users and,...
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