SAN FRANCISCO - Facebook will pay $1 billion in cash and stock for photo-sharing application Instagram, making its largest-ever acquisition months before the number one social media website is expected to go public.
The popular Instagram application, which allows users to add filters and effects to pictures taken on their smartphones, has gained about 30 million users since it first launched in January 2011.
Despite a loyal and active following, Instagram lacks any significant revenue sources. The start-up, with roughly a dozen employees based in San Francisco, reportedly closed a $50 million funding round last week from investors including Sequoia Capital that valued the company at $500 million, according to the technology blog AllThingsD.com.
Facebook, which is expected to launch a $5 billion initial public offering in May, will acquire Instagram's entire team.