Facebook buys Whatsapp case

Faculty: Dr Tejpavan Singh Gandhok

Case Study Facebook's ( FB) $19 billion acquisition of Whatsapp ( WA) in early 2014. : please research
and distill your thoughts and specific answers re the key issues below- especially issue #4 ,5 and 6 for this
case

A key objective of this FB buys WA case is to help you join the dots between three key concepts :
"intrinsic value creation for shareholders" + "strategy" + "business model" that you would have come
across in popularly used jargon in business media and other business contexts.

Please note: in addition to the two case links below, I strongly encourage you to most importantly use
your own critical and integrative reasoning and thus armed with more specific critical questions conduct
your own additional online research and therefore arrive at your key answers to below issues especially
#4 , #5 and #6.

You will get much more value from this case discussion if you do the preparation and try your level best
to come to this session with your distilled thoughts on answers to the key case questions below , simple
bullet points are fine. ( Feel free to bring along any additional key exhibits of specific relevant
trends/facts; your analysis/ estimates that specifically support your conclusions).

Key Case Issues:

1) What is Whatsapp's (WA) business model , what is it's strategy ?

2) What is Facebook's (FB) business model , what is it's strategy ?
3) a) How does FB's business model differ from WA's ?

b) How does acquiring WA fit into FB's strategy ?

c) How does acquiring WA impact FB's business model?

4) Was this acquisition primarily driven by Whatsapps greater (relative to FBs at that time) Emerging
Market traction & footprint or primarily by implications for US market considerations?

5) Do you think FB's acquisition of WA for $19B was financially justifiable at the time of doing the deal
( ie try to focus on addressing this question based on what could be anticipated / predicted circa late
2013- early 2014 ie not with the benefit of hindsight as at 2017) ie is the deal (on balance of probability)
likely to be Value Creating for FB at the time of the decision ? or is it Business Value Preserving or
Value Destroying ?

6) FB outbid Google for this deal, is that a) systematically predictable ...or b) was it a mere random,
once off circumstance... or c) perhaps is it an indication of the "winners curse " for FB (ie that they
over-paid) ?

Copyright Dr Tejpavan Gandhok Page 1

 Facebook buys Whatsapp case

Ps: Regarding preparation for this case, please feel free to do so either individually , with a Group or with
any colleagues/ friends of your choice ( you can also phone a friend and ofcourse by all means try your
best to look up the answer on the internet ;)

In other words, whatever form of preparation you feel is more time efficient and productive to help you
arrive at clear, considered and conclusive answers to the above case issues especially #3, 4 and 5

Some Links Analyzing this deal please read to help understand case ( but do not rely solely on these,
try and do more research on your own if you are not satisfied ) :

http://www.edupristine.com/blog/analysis-facebook-acquisition-whatsapp-part-2

https://techcrunch.com/2015/02/19/crazy-like-a-facebook-fox/

Optional article:

Below link of optional (but suggested as useful, interesting reading for your general knowledge ie may
not help you address this case specifically but will improve your understanding to refresh and/ or
enhance your appreciation of business models

https://hbr.org/2015/01/what-is-a-business-model

About the Faculty:

Dr Tejpavan Gandhok (Pavan) has an eclectic and international background as an entrepreneur and pracademic.
Pavan is a popular speaker and thought leader, making regular appearances in popular business media and in
various CXO/ Investor forums and corporate leadership retreats. He is a Practice track faculty of Strategy &
Entrepreneurship Indian School of Business and Visiting fellow at U of Melbourne and the Anderson School at
UCLA. His research interests are mainly in Adaptive Strategy under highly dynamic and uncertain conditions.

Pavan is a serial entrepreneur with a strong track-record of high investor returns and successful exits. He actively
collaborates with several leading investor funds and start-ups as venture advisor/ angel investor. His track-record
covers a range of situations including start ups, high growth as well as turn-arounds; with both Consumer & Retail
themes as well as knowledge/ technology intensive businesses. Prior to his entrepreneurial stints, Pavan has more
than 15 years of international Senior Partner level corporate advisory experience in Country & Regional Head roles
across Australia, USA, South East Asia and India with Strategy consulting & Private Equity firms such as Halcyon
Partners, AT Kearney, Stern Stewart & co. and the Boston Consulting Group. In earlier career roles he worked in
corporate strategy; technology management and incubation, and as an engineer and research scientist.

He is an Indian born, US educated, Australian citizen, former Permanent Resident of Singapore and currently an
Overseas citizen of India.

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 Facebook buys Whatsapp case

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