Facebook Acquires Instagram: When Facebook Inc (NASDAQ:FB) decided to purchase Instagram for $1 billion, the decision sent shock waves through Silicon Valley and Wall Street.
While this was a big surprise to many, the people at Twitter had to be even more shocked. According to a recent report in the New York Times online, the founders of Instagram were in discussions with the top brass at Twitter regarding a sale.
When testifying at a hearing of the California Corporations Department in August, Instagram CEO Kevin Systrom was being probed as to whether the company had received any other offers.
His response: “We never received any formal offers or term sheets.”
According to the New York Times piece, this may not be 100% accurate:
Yet the accounts of several people close to Twitter and Facebook, and documents reviewed by The New York Times, contradict the statements he made under oath. Mr. Systrom and Mike Krieger, the other founder of Instagram, held several meetings as late as March with top Twitter executives, according to people on both sides of the talks, who requested anonymity because the talks were private and because they were concerned about legal repercussions. These people said the sides had verbally agreed weeks earlier on a price for Instagram of $525 million in cash and Twitter shares.
While the facts seem to be out of place at this time, many are wondering why this is such a big deal.
To answer this question, the New York Times reached out to University of California, Berkeley law professor Eric Talley. He shed some light on this situation:
“If there is sworn testimony, there are perjury risks. There are fraud risks in which an inaccurate statement to your investors could violate antifraud laws at both the state or federal level.”
From a public perspective, the purchase of Instagram by Facebook Inc (NASDAQ:FB) was surprising on many fronts. That being said, it appears that the executives at Twitter were the ones who got the worst of the deal.
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