Question

2. As a shareholder in Facebook, how do you feel about Facebook’s acquisition of Instagram? Has Facebook met its obligations to shareholders?

Answer 1

As a shareholder of Facebook, I would be pleased to see that Facebook has gone into acquisition of a company which is into the same product line and acquisition of this company would mean that the Facebook will be able to gain a large amount of market share and it will able to increase the core competitiveness and it will be also able to increase the marketshare, so it would be advantages in the long run because it would be creating a lot of synergy for the company and it can also lead to increase in the share price of the company in the long run through value maximization philosophy & it can be said that acquisition of Instagram is a good thing for the shareholders of Facebook because to that will help them in order to create value in the the long run as Instagram in Facebook are into the same line of industry and Facebook and Instagram would be able to create a large amount of synergy for this business combination.

As a long term shareholder, I would have been sceptical of initial acquisition that Facebook was providing it with extensive valuation of almost 1 billion dollars and these valuations to a small company would not have been advantages but looking at the Synergy benefits that would have been created through acquisition of the Instagram in the longer period of time, it would have been into the interest of longer-term of shareholders and it could have been little creation of the value for them so as a shareholder, I would be highly enthusiastic about this Acquisition.

Facebook has met it's obligation according to me, because Facebook even though It had paid a large amount of fees for the acquisition of the Instagram, still Facebook has been able to acquire this company beating a lot of its competitors and which will be leading to gaining a better competitive edge in the entire industry and it would also help Facebook in getting a leadership status which can be said that Facebook has fulfilled its obligation to the shareholders by acquiring this company even though it has paid highest amount of bidding price.