Whatsapp Acquisition Closing Extended By Facebook

In the filing of its quarterly report, the biggest social network of the world, Facebook stated that there was a possibility that it may choose to extend the closing date of Whatsapp acquisition by one year to be exact. The social networking firm had announced the purchase of this mobile messaging startup for a whopping cost of $19 billion. For this purpose, the social networking titan had previously agreed that if the purchase wasn’t finalized and closed by 19th August, 2014, then it would be willing to pay a termination fee of $1 billion in the form of stock and $1 billion in the form of cash.

Now, the company wishes to extend the date of the closing to August 19th, 2015 because it will be able to fulfill the conditions that will allow the extension to be effective. The filing added that it is highly likely that the transaction will be closed in this very year. In the report, the social networking giant also said that a probe in the company was dropped by the US Securities and Exchange Commission (SEC) concerning the events pertaining to its highly controversial initial public offering. The company said that in May, they had been notified by the regulator that the inquiry was being terminated and the SEC had not made any recommendations regarding any necessary enforcement action.

It was on May 18th 2012 that the trading of Facebook shares had begun. However, it didn’t take long for the offering share price to drop from its starting point of $38 and by the middle of August; the shares had lost more than half of their value. This had considerably angered the investors of the company. Technology problems had tarnished the launch of the company, which led to a delay in trading and made it very difficult to process trades.

Some other complaints made by investors also included the fact that they weren’t aware that the analysts of the investment banks of Facebook had cut their forecast right before the IPO because they had become aware of the internal projections made by the company regarding its advertising revenue. Nevertheless, the end of the probe by SEC by no means has any impact on the shareholder litigation filed against the company, against numerous banks and chief executive Mark Zuckerberg because of the IPO of the Menlo-Park, California-based firm. This litigation is still pending and will be conducted in the federal court of Manhattan.

Facebook’s decision to purchase Whatsapp had given rise to a lot of speculations about the company’s motive. Before Whatsapp, the company had purchased Instagram, another popular image-sharing application. The company had faced criticism when it had changed the privacy policy of Instagram and had had to deal with a lot of backlash. The firm’s intent regarding the popular messaging application Whatsapp remains to be seen. If the date of the closing is extended till next year, the company will have to bear the cost of the termination fee, on top of the purchase.