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Mark Zuckerberg, Facebook's CEO, didn't tell his board that the company was buying Instagram for $1 billion until the day of the sale.
Mark Zuckerberg, Facebook's CEO, didn't notify his board of the company's $1 billion purchase of Instagram until the day of the sale, the Wall Street Journal reported on Wednesday.
Though Zuckerberg and the photo sharing company's CEO Kevin Systrom had been talking over the deal for three days, the morning of April 8 was the first that Facebook's board had heard of the buyout, which is the social network's largest acquisition ever, according to the Journal.
The board "was told, not consulted," one person familiar with the matter told the Journal.
More from GlobalPost: Facebook to pay $1 billion to acquire Instagram
According to sources, Systrom opened the negotiations at $2 billion. Over several meetings at Zuckerberg's $7 million five-bedroom home in Palo Alto, the two 20-something CEOs agreed to the $1 billion sale without the help of the usual slew of lawyers and bankers looking over the deal, the Journal reported.
"Thanks to the Internet’s astonishing reach, a nifty product that required next to no labor and comparatively little capital quickly went from nowhere to tens of millions of users," wrote Bloomberg's Clive Crook of the Facebook-Instagram deal. "The idea was valued at $1 billion even before there was a revenue model to support it, and who’s to say that’s too much?"
The deal comes ahead of Facebook's much anticipated IPO — in fact, Zuckerberg agreed to pay Instagram roughly 30 percent in cash and 70 percent in stock, the New York Times reported. Facebook is estimating its stock price will sit at at least $30 a share, giving the company a value of over $75 billion once it goes public, according to the Times.
While Facebook was not the first social network, it quickly became the largest, the Times reported. Currently valued at $104 billion, Facebook is worth more than LinkedIn, Twitter, Groupon and Zynga combined.
More from GlobalPost: Facebook IPO: Five things you should know
When the social networking giant does go public, however, such quick, closed-door deals may get more difficult, according to the Journal.
"You want the board to provide caution to the CEO,'' Ralph A. Walkling, executive director of the Center for Corporate Governance at Drexel University's business school, told the Journal. "They are the last line of defense for minority shareholders.''