WhatsApp, which often tops the most popular application charts, is an alternative to text messages and has more than 450 million monthly global users.
The deal comprises $4bn in cash and $12bn worth of Facebook shares. The agreement also provides for an additional $3bn in restricted stock units to be granted to WhatsApp's founders and employees and to be paid in four years. Jan Koum, a Ukrainian who went to the US aged 16 and who dropped out of college, and Stanford alumnus Brian Acton are the main founders of WhatsApp.
Facebook's Mark Zuckerberg said he first approached Mr Koum about a deal on February 9. Mr Zuckerberg said WhatsApp will continue to operate independently and have a policy of no advertising. There were no details on how the company would make money beyond a $1 annual fee which is not charged in the first year.