Instagram Initially Wanted $2 Billion from Facebook

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Details have emerged about the negotiations prior to Facebook's recent USD1 billion offer to buy the mobile phone sharing service Instagram.

Most notable is that Facebook's CEO, Mark Zuckerberg sealed the deal without informing the rest of the board of directors, and that he had negotiated the price down from an initial USD21 billion.

Citing people familiar with the matter, the Wall Street Journal reported that the negotiations between Facebook's Zuckerberg and Instagram's Kevin Systrom took place over a period of three days, largely at Zuckerberg's private home.

It was only after the two had sealed the all-shares deal that Zuckerberg -- who still controls 57% of the voting shares in the company -- brought in the rest of the company directors to approve the transaction.

Although Facebook had mulled making an offer for Instagram for some time, it appears the launch of the Android app which saw its customer base jump sharply in just a few days that finally spurred Facebook into making an offer.

The company appears to have been slightly spooked by the rapid growth of a company that is very strong in mobile services, an area which despite much traffic, Facebook has struggled to monitise.

So secret were the talks that Marc Andreessen, who is an investor in both companies was not aware the talks were taking place when he arrived at Zuckerberg's house for a regular meeting - even as the two companies were finalising the deal.

Zuckerberg marked the deal by sending a photo via Instagram, a service he hadn't personally used for nearly 10 months.

On the web: Wall Street Journal

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Tags: instagram  facebook 

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