Facebook may be just days away from closing its monster cash and stock acquisition of photo-sharing service Instagram.
The social network today received the approbation of the California Department of Corporations. The department, following a Fairness Hearing, granted Facebook a permit to issue stock in Instagram, a Facebook representative confirmed to VentureBeat.
The news comes just a week after Facebook received the approval of the Federal Trade Commission to move forward with the purchase. With most of the red tape cleared, Facebook can finally close its Instagram deal. It’s our understanding that the deal could close as soon as this week or next.
Facebook agreed to purchase Instagram in early April for $300 million in cash with an additional 23 million shares of common stock. With the social network’s stock price hovering around $19 a share, the deal is currently worthy around $741 million, or about $260 million less than the original $1 billion value at the time of negotiations.
But no matter, Instagram co-founder Kevin Systrom said. “The billion dollar valuation headline was something generated from the press,” Systrom said at the hearing, as reported by the Wall Street Journal. “We were always talking percentage of Facebook outstanding stock plus a cash consideration.”
Well not exactly, Mr. Systrom.
Facebook did confirm that the “total consideration for San Francisco-based Instagram is approximately $1 billion” at the time of the announcement. So while Systrom may have never considered the $1 billion offer to be the final price tag, that was clearly the amount that both Zuckerberg and Systrom had in mind when coming up with the terms. And both CEOs couldn’t have possibly known that Facebook’s market value would be chopped in half just three months after its initial public offering.
Still, the deal is a landmark one in both price and magnitude. The buy, atypical for Facebook which tends to purchase or hire little shops for small sums, means that the social network can keep the red-hot photo property out of competitor Twitter’s hands.
Right now, the purchase looks to be a shrewd one. Instagram has ballooned to more than 80 million users, up from 30 million in April, and often steps on Twitter’s toes as a social network that captures breaking news.