Instagram Founders Take $265 million Paycut in Facebook Deal
Instagram Founders Kevin Systrom and Mike Krieger were officially acquired by Facebook today. Systrom uploaded the news to his Facebook Feed saying, “We’re officially joining the Facebook family…I’m psyched for the next chapter of this long journey.”
The deal was announced in April 2012 when Facebook offered to buy the site for $1 billion comprising of $300 million cash and 23 million shares of stock valued at $700 million at the time. Since then, Facebook has gone public and that value has dropped to $435 million which means that the Instagram founders lost $265 million by today’s closing price. Ofcourse that amount may go up if they hold on to the shares and its price recovers.
Reports say last week at a hearing to get the approval, Systrom disclosed to regulators that all sixteen Instagram employees would move into the Melo Park, California headquarters of Facebook.
Systrom also negotiated with Facebook for 1% of the company’s entire stock in Class B shares for Instagram shareholders. The Class B shares offer the shareholders voting rights.