Facebook has agreed to buy mobile photo-sharing app Instagram for approximately $1 billion in stock and cash. It is Facebook’s largest acquisition to date, and comes just weeks before its highly-anticipated IPO.
According to its registration documents, Facebook had around $3.9 billion in cash on hand as of year-end 2011.
“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,” said Mark Zuckerberg, in a statement posted on his Facebook timeline. “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.”
San Francisco-based Instagram had raised around $8 million in venture capital funding, from Andreessen Horowitz, Baseline Ventures, Benchmark Capital, Chris Sacca, Adam D’Angelo and Jack Dorsey.
Then, last week, it reportedly closed on $50 million in new funding at a $500 million valuation that included new investors Sequoia Capital, Thrive Capital and Greylock Partners.
“It’s important to be clear that Instagram is not going away,” Instagram CEO Kevin Systrom wrote on his company blog. “We’ll be working with Facebook to evolve Instagram and build the network. We’ll continue to add new features to the product and find new ways to create a better mobile photos experience.”
Mark Zuckerberg announced the deal in a Facebook post:
Check out the video and the Mark Zuckerberg Facebook Post…
“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.”
