Facebook acquired Instagram months ago, but the deal was still pending regulatory approval, given potential antitrust issues. The Federal Trade Commission approved the deal today after reviewing it.
Facebook acquired Instagram right before its IPO for $300 million in cash and around $814 billion in stock, based on its IPO price of around $38. Now that its stock has cratered to nearly $19, the acquisition value is down to around $750 million, which is much lower.
Reasons by the Federal Trade Commission and the UK Office of Fair Trading for approving the acquisition included that fact that there was significant competition in the mobile photo sharing space, and that it didn’t generate any revenue. They also stated that Google’s ad business would offer tough competition to Facebook in the online ad space.
Facebook’s official statement on the FTC approval says:
“We are pleased that the Federal Trade Commission has cleared the transaction after its careful and thorough review.”
Instagram was probably one of its best acquisitions to date, and gives it a staggering lead in the mobile photo sharing space as well as access to more than 80 million users.