Facebook to Acquire Oculus for $2 Billion

by Istvan Fekete on March 26, 2014

Facebook announced yesterday its plans to acquire Oculus VR, the company behind the Rift headset. The $2 billion purchase doesn’t compare to the $19 billion they agreed to pay for WhatsApp but is double the amount paid for Instagram. The Facebook–Oculus deal includes $400 million in cash and 23.1 million shares of Facebook stock (valued at $1.6 billion based on the average closing price of the 20 trading days preceding March 21, 2014, of $69.35 per share).

In a statement issued on the day of the transaction, Facebook CEO Mark Zuckerberg shared his excitement regarding the deal with Oculus VR, the leader in virtual reality technology: “Our mission is to make the world more open and connected. For the past few years, this has mostly meant building mobile apps that help you share with the people you care about. We have a lot more to do on mobile, but at this point we feel we’re in a position where we can start focusing on what platforms will come next to enable even more useful, entertaining and personal experiences.”

“This is where Oculus comes in. They build virtual reality technology, like the Oculus Rift headset. When you put it on, you enter a completely immersive computer-generated environment, like a game or a movie scene or a place far away. The incredible thing about the technology is that you feel like you’re actually present in another place with other people. People who try it say it’s different from anything they’ve ever experienced in their lives.”

As Zuckerberg pointed out, Oculus will maintain focused on gaming, and will operate independently of Facebook. After gaming, however, the young billionaire says they are going to expand into a variety of other markets.

On the other hand, Oculus highlighted that the benefits of the partnership won’t be immediately visible: “At first glance, it might not seem obvious why Oculus is partnering with Facebook, a company focused on connecting people, investing in internet access for the world and pushing an open computing platform. But when you consider it more carefully, we’re culturally aligned with a focus on innovating and hiring the best and brightest; we believe communication drives new platforms; we want to contribute to a more open, connected world; and we both see virtual reality as the next step. Most important, Facebook understands the potential for VR.”

The deal is expected to close in the second quarter of 2014. According to available data, Oculus has so far taken 75,000 VR headset orders. The recently acquired company has so far received more than $93 million in funding by multiple parties: Spark, Matrix, Founders Fund, Formation 8, BIG Ventures, and Andreessen Horowitz.

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Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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