Facebook's $US19 billion ($A21.13 billion) deal for the red-hot mobile messaging service WhatsApp is a savvy strategic move by the world's biggest social network, even if the price tag is staggeringly high, analysts say.
The agreement unveiled on Wednesday - seen as the largest for a venture-backed tech startup - gives Facebook entry into emerging markets and importantly keeps the free-messaging app out of the hands of rivals such as Google.
"Although the deal appears to be pricey ... we think that it has compelling strategic logic," Shebly Seyrafi at FBN Securities said in a research note on Thursday.
While Facebook is paying a high price by any measure, Seyrafi said "we see other benefits to the deal," pointing out WhatsApp's big user base in countries such as Brazil, South Africa and China.
"We think that in addition to the revenue obtainable from WhatsApp itself, Facebook will benefit from better integration ... that will make Facebook more engaging while driving further growth internationally and in mobile," the analyst said.
Facebook shares shook off early declines and rose 2.3 per cent to close at $69.63, despite the fact that the company is diluting its value with the massive cash-and-stock acquisition.
The purchase includes $US12 billion in Facebook shares and $US4 billion cash. It calls for an additional $US3 billion in restricted stock units to be granted to WhatsApp founders and employees that will vest over four years.
Analyst Stephen Ju at Credit Suisse said the move appears to make sense from a long-term viewpoint.
"Looking past the sticker shock of $US19 billion ... we view this as an offensive move to gain additional share of the consumer's time spent - which should engender additional opportunities for monetisation," he said.
Trip Chowdhry at Global Equities Research called the move a "very smart and an essential acquisition for Facebook", because WhatsApp works on less expensive "feature phones" still predominant in emerging economies such as India.
"Most of the developing world still is on the feature phone, as the majority cannot afford a smartphone," Chowdhry said.
"WhatsApp is the only application that runs equally well on feature phones and on smartphones."
Deutsche Bank analyst Ross Sandler said Facebook's acquisition of WhatsApp "solidifies its position as the top company in mobile globally" excluding China, where Facebook is banned.
Sandler said that even though Facebook is not planning to deliver ads on WhatsApp for now, this may change over time.
