In 2012 Facebook bought Instagram for $1 Billion. Earlier this year, in February, Facebook paid $19 Billion for WhatsApp, now they just bought another company – Oculus VR. Oculus announced it on their blog “Oculus Joins Facebook“.
Facebook paid $2 Billion for Oculus VR
According to Forbes it breaks down as follows:
- $400 million in cash
- 23.1 million shares of Facebook stock
- additional $300 million potential earn-out in cash and stock based on “the achievement of certain milestones.”
So they have $400 million in cash and they obtained a substantial amount of Facebook stock. Giving away stock can be a great way to acquire companies in the short term. In the long term there is a balance between what they believe the stock will be worth and what percentage of the future appreciation will be due to the company they acquired. Bottom line is that they only gave up $400 Million in cash for a $2 Billion purchase. Not a bad deal for Facebook, and I would assume a great deal for Oculus VR.
An excellent Zuckerberg quote – “Mobile is the platform of today, and now we’re also getting ready for the platforms of tomorrow,”. Oculus stated in their press release:
“This partnership is one of the most important moments for virtual reality: it gives us the best shot at truly changing the world. It opens doors to new opportunities and partnerships, reduces risk on the manufacturing and work capital side, allows us to publish more made-for-VR content, and lets us focus on what we do best: solving hard engineering challenges and delivering the future of VR.”