FTC clears Facebook's acquisition of Instagram

SAN FRANCISCO Thu Aug 23, 2012 6:54am IST

A photo illustration shows a picture of a flower taken with the photo-sharing application Instagram on the screen of an Android mobile phone in Los Angeles April 9, 2012. REUTERS/Fred Prouser/Files

A photo illustration shows a picture of a flower taken with the photo-sharing application Instagram on the screen of an Android mobile phone in Los Angeles April 9, 2012.

Credit: Reuters/Fred Prouser/Files

Stocks

   

SAN FRANCISCO (Reuters) - The U.S. Federal Trade Commission cleared Facebook Inc's (FB.O) acquisition of Instagram, voting unanimously to close its antitrust investigation into the deal without taking any action.

The move frees Facebook to complete its purchase of the mobile photo application maker, the biggest acquisition in its history. Facebook announced plans to buy Instagram in a cash and stock deal for $1 billion in April.

Under the terms of the deal, Facebook will acquire Instagram for $300 million in cash and roughly 23 million shares of Facebook common stock.

The deal is currently valued at $747.1 million, based on the $19.44 closing price of Facebook's shares on Wednesday.

Shares of the world's No.1 online social network have declined roughly 50 percent since the company's highly-anticipated initial public offering in May. Slowing revenue growth and a flood of insider shares that could hit the market in the coming months are among investors' key concerns.

The Instagram application, which allows users to add filters and effects to pictures taken on their smartphones, could bolster Facebook's mobile efforts -- an area that is considered something of a weak spot for the company.

The deal also ensures that the fast-growing mobile app, which said it had 80 million users in July, will not fall into the hands of a Facebook rival such as Twitter or Google Inc (GOOG.O).

Still, the price that Facebook paid for the two-year-old company, which doesn't have any revenue, stunned analysts and investors.

Facebook said in its most recent 10Q regulatory filing that it plans to maintain Instagram's products "as independent mobile applications to enhance our photos product offerings and to enable users to increase their levels of mobile engagement and photo sharing."

Facebook did not provide a further update on the timing of the deal on Wednesday, but said it was pleased the FTC has cleared the transaction.

Facebook had initially said it expected the deal to close in the second quarter, but later changed the time frame, saying it expected the deal to close by the end of the year.

Facebook is scheduled to appear at a so-called "fairness hearing" before the California Department of Corporations on August 29.

The hearing, which provides California-based companies with an alternative to registering shares with the Securities and Exchange Commission, could expedite the transfer of Facebook shares to Instagram, potentially making it possible for the deal to close as soon as next week. (Reporting By Alexei Oreskovic; Editing by Bernard Orr and Ryan Woo)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Jan Dhan Yojana

REUTERS SHOWCASE

Japan Trip

Japan Trip

Modi eyes breakthrough nuclear pact on Japan trip.  Full Article 

Chance For Reform

Chance For Reform

India's coal crunch - a chance to revamp, reallocate and revive.  Full Article 

E-Commerce

E-Commerce

Ratan Tata invests in online retailer Snapdeal.  Full Article 

Top Priority

Top Priority

Finance minister says food inflation is top priority.  Full Article 

Deal Talk

Deal Talk

Who wants to buy Snapchat? Microsoft, Google, Apple, Alibaba.  Video 

Fresh Funding

Fresh Funding

Tiger Global leads $65 million funding in Indian messaging app Hike.  Full Article 

GDP Preview

GDP Preview

Economy likely grew faster in June quarter: Reuters poll.  Full Article 

Safety Net

Safety Net

SEBI revamps trading safety-net rules.  Full Article 

Fraud Investigation

Fraud Investigation

IMF's Lagarde put under investigation in French fraud case.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage