It was a very busy year as far as mergers and acquisitions are concerned and the number of deals was way too many to mention separately. But some notable splits were also announced that will totally change companies as we knew them.
The biggest deal of the year was WhatsApp, which Facebook (FB – Analyst Report) acquired for $19 billion in cash and shares.
WhatsApp Buys Facebook 450 Million Users
At the time of the deal, WhatsApp had 450 million daily active users (DAUs), which built upon Facebook's 550 million (granted that there was most likely a significant overlap). But WhatsApp revolutionized text messaging because for a mere $1 after the first year of using the app, users can send an unlimited number of messages to those on their contact list. So it made great sense for Facebook to bring it into its folds.
Facebook is running the business as a separate unit, but mining user data generated from WhatsApp could further help customer profiling and thereby, its ad serving business.
The deal directly impacts mobile messaging revenue of telecom operators, many of whom are already under pressure. WhatsApp is expected to add voice call services at some later date, which could further increase this pressure.
Facebook Also Buys Occulus
In March, Facebook spent $2 billion to purchase Oculus, which makes a popular virtual reality (VR) headset called Rift. Its use for this futuristic technology isn't that obvious although CEO Mark Zuckerberg has said that VR is the next big computing platform after mobile, so Facebook needs to have a finger in the pie.
Most of the software development surrounding this headset has been focused on gaming, but Facebook could be thinking of new areas such as classrooms and healthcare. Some users and developers fled the platform for fear that Facebook would be sharing their personal data to advertisers (which is how it generates revenue).
Apple Buys Beats Electronics
Apple (AAPL – Analyst Report) strengthened its music business with the acquisition of Beats Electronics for $3 billion in May 2014. Beats not only has a thriving music streaming business and a growing library of music tracks, but also specialized headphones that generated a billion dollars in annual revenue and helped the company report a profit. The business was intended to complement Apple's iRadio music service. Apple announced new headphones from the company in time for the 2014 holiday season.
