Today Facebook detailed the final Instagram purchase information in its 10-Q. The company stated that the final purchase of Instagram will sit in its accounting as $521 million.
That figure was arrived at by adding the $300 million in cash that Facebook promised, and the price of 12 million vested shares of Class B common stock. This stock was given to “non-employee stockholders” – investors, it would seem – but not the staff itself.
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Adding to the tally, Facebook has issued 11 million un-vested shares to Instagram’s employees, a pool that includes its founders. These shares will vest over a three year period. They have an “aggregate fair value of $194 million.” Adding the two together, Facebook’s final payment for Instagram totals $715 million.
Why is that total lower than the previously, and famously reported $1 billion figure? Facebook stock price has declined since that moment. The deal was $300 million in cash, and 22,999,412 shares. In the run up to its IPO, the value of the deal crested the billion dollar mark. However, post-IPO Facebook suffered from a falling stock price, lowering the total value of the deal.
Part of the deal was a $200 million charge to Facebook if the agreement fell through.
Instagram surely would have preferred the billion straight up, but $715 million is hardly chump funds. However, investors who put in $50 million at a $500 million valuation aren’t going to see their funds double as they had perhaps thought.
Top Image Credit: Jo Jakeman