The Federal Trade Commission on Wednesday cleared Facebook’s proposed purchase of Instagram by a vote of 5 to 0, after reviewing concerns over potential anti-trust violations. Instagram is a free photo-sharing social network that allows users to take and digitally filter photographs. When the deal had been tentatively struck, Instagram was valued at $1 billion, but has seen its value fall in conjunction with Facebook’s stock price.
Facebook’s IPO occurred on May 12, 2012 at $38 per share, but its price has plummeted to $19.45 per share at Wednesday’s close. When the agreement was reached, it involved $300 million in cash and 23 million shares. Today the deal would mean a value of $747 million for Instagram.
Despite a steady climb by the NASDAQ Composite Index since the Facebook IPO in May, shares of Facebook, which trade on the NASDAQ, have lost almost have their value. Earlier this week, Peter Thiel, the hedge fund manager who was the first outside investor in Facebook, sold 20.1 million shares of the stock.
Facebook spent nearly a quarter of the cash it had on hand at the end of 2011 in its April 12, 2012 purchase of Instagram, which was exactly one month before Facebook went public.
Facebook is the world's largest social media network with nearly 1 billion members worldwide.