Facebook's campus at 1601 Willow Rd. in Menlo Park, Calif.
Facebook’s campus at 1601 Willow Rd. in Menlo Park, Calif. ()

PALO ALTO — Facebook will fork over a whopping $19 billion to buy 5-year-old mobile messaging startup WhatsApp. Facebook Inc. was advised by Weil, Gotshal & Manges, and its target turned to Fenwick & West for legal counsel.

The acquisition price dwarfs that of Facebook’s biggest buy to date, the purchase of Instagram in 2012 for $1 billion. It’s also the biggest Internet deal since the 2000 union of AOL Inc. and Time Warner Inc.

The news had analysts marveling at the dizzying valuations being reached across the sector and fueled speculation on Twitter, from media and Valley fixtures alike, that a bubble may be at hand.

Box Inc. founder Aaron Levie, whose file-sharing company announced plans to go public this year, tweeted, “OMG the Internet is so crazy and amazing all at once.” Michael Yang, general counsel at Pinterest, another hot tech company, noted that “Spending $19B on an acquisition may seem reckless, but it could also be seen as incredibly humble and self-critical.”

During a conference call Wednesday, Facebook CEO Mark Zuckerberg remarked that WhatsApp is “the only app we’ve ever seen with higher engagement than Facebook itself.” WhatsApp has an estimated 450 million users and handles messages approaching the global volume of telecom text messages, or around 7 trillion messages annually, according to Facebook’s announcement.

Facebook will pay $4 billion in cash and $12 billion in Facebook stock, which closed down 4 percent on Wednesday. Another $3 billion is being paid in restricted stock granted to WhatsApp Inc. employees that will vest over four years, creating an incentive for its workers to stay. WhatsApp currently has around 50 employees; it’s unclear for now whether they’ll all be retained.

The company’s general counsel is Anne Hoge, who came aboard from NetApp Inc. in August. She was previously associate GC at Yahoo Inc.

The Weil deal team advising Facebook included corporate partners Keith Flaum and Jane Ross and technology transactions partner Karen Ballack in Silicon Valley. The team was backed up by employee benefits, tax and securities lawyers in New York. Fenwick’s team was led by Mountain View corporate partners Sayre Stevick, Andrew Luh and Shawn Lampron.

It was only two months ago that WhatsApp cofounder Jan Koum told The Wall Street Journal the company had no plans to raise more money, sell or go public. The Yahoo veteran took to the company’s blog to assure users that preserving the company’s autonomy was a key commitment.

“Here’s what will change for you, our users: nothing. … There would have been no partnership between our two companies if we had to compromise on the core principles that will always define our company, our vision and our product,” Koum wrote.

Zuckerberg also made clear that WhatsApp will preserve its brand, headquarters and stand-alone messaging app under its new ownership. “It would be pretty stupid for us to interfere in a big way,” Zuckerberg said during Wednesday’s call. “We want to do this the same way we did Instagram, but obviously on a much bigger scale.”

Bringing on the Instagram team helped Facebook fashion itself into a place where entrepreneurs can maintain some independence while leveraging the social network’s vast resources. That independence can be an important lure, Craig Jacoby, head of Cooley’s emerging companies practice, told The Recorder in December. One of the big questions for companies hoping to bring on employees is “how can we get the team sufficiently excited about working here that they give up their independent entrepreneurial dreams,” he said.

The CEOs said they do not anticipate any regulatory issues as part of the transaction, which is expected to close later this year.

Contact the reporter at callison@alm.com.