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“On February 20, 2014, Mark Zuckerberg (Zuckerberg), Founder and CEO of Facebook Inc (FB)acquired WhatsApp Inc (WA), a mobile application developer, for $19 billion. The price was paid inthe form of stock $12 billion, cash $4 billion, and restricted stock $3 billion . Following thisacquisition, there were mixed reactions in the market. Some believed that the acquisition was in linewith FB’s strategy, while some felt it was a directionless acquisition. But Zuckerberg was confidentthat it was the right decision. “No one in the history of the world has ever done something like this,”he said. He believed that the increasing user base of the WhatsApp mobile messenger (WhatsApp)across the world could be an added advantage for the development of FB’s business prospects.”M&A activity have risks associated with them (Furfine and Rosen, 2011). They may create or destroyvalue depending on how they perform (Ferrer, 2012).In not more than 1000 words, critically assess the above case study to evaluate to what extentZuckerberg was right in his decision through the use of empirical evidence and literature. |
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