Face.com acquisition by Facebook not a done deal yet (but getting close)

Will Facebook end up buying facial recognition technology startup Face.com for around $100 million as Israeli business media reported earlier this week?

TechCrunch says the acquisition is both ‘happening’ and a ‘done deal’, which are two very distinct things as far as we know. What we hear is that it’s in the works, but a done deal it is not, and a final price hasn’t even been negotiated yet.

From what we can gather, both companies are still hammering out a final agreement and it could take a few more days to get everyone at the table on the same page. A deal seems imminent, but there’s no guarantee of a final sign-off at this point.

Israeli tech blog NewsGeek reports (in Hebrew) that one of the issues standing in the way of an acquisition agreement at this point is Face.com’s desire to keep its staff in the country, something that’s said to be very important to co-founder and CEO Gil Hirsch and the rest of the founding team.

Another possible obstacle is the final purchase price, and more specifically how much of it would be paid in cash rather than company shares, according to NewsGeek’s sources.

These are the same issues that got in the way of an acquisition of Face.com by Facebook in the past, by the way, so we’ll have to wait and see if the deal gets signed in the next few days or not (or put on hold for later once again).

When Facebook acquired Israeli startup Snaptu over a year ago, its engineers were encouraged to move to California to work for the social networking company.

Now, NewsGeek says, Facebook may consider opening up a proper R&D center in Israel (like many major tech companies have done in the past, we should add) partly to be able to reach an agreement with Face.com.

For Facebook, this would be a big step, as it would be its first tech operations center outside of the United States.

We already outlined why an acquisition of Face.com would make sense. Primarily, the company’s highly accurate facial recognition software could help Facebook users identify people in photos faster, both on the website on its mobile products.

The Israeli startup built a popular Facebook application itself called Photo Tagger, which lets people scan their (or their friends’) photo albums for known faces, and just recently launched a mobile facial recognition app for iOS called KLIK.

The startup also operates a platform of its own by offering a public API.

Facebook, although neither company will publicly confirm this, happens to the biggest ‘customer’ of Face.com’s API by the way.

Founded in 2007, Face.com has raised $5.8 million to date from Rhodium and Russian online services giant Yandex. According to newspaper Vedomosti, via GigaOM, Yandex is in talks to sell its stake in Face.com to Facebook.