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I might be wrong, but as far as I know they haven't sold yet (it's still got to clear regulators?) so although he technically could have walked away I don't thi

I might be wrong, but as far as I know they haven't sold yet (it's still got to clear regulators?) so although he technically could have walked away I don't think it would been sensible as he isn't going to be able to cash out yet?

zio99 14y ago
Some sources (the NY Post for example) say the deal may take up to 6 months with a 50% chance of going through. There's some concerns as to whether Instagram may prevent sharing with social networks other than facebook (flickr for e.g.). I'm already booted off instagram without upgrading to the new app, but fear that I'll be forced to share all my instagram pictures on my facebook timeline.
- brlewis 14y ago
  To prevent sharing out except to Facebook, Instagram would have to disable its API and stop saving photos to Camera Roll. I don't expect either of those to happen. Even if the deal might fall through, I could easily imagine Mike taking a day or two to celebrate instead of jumping back in and answering questions, particularly on the instagram-api list, since nurturing a slowly-growing ecosystem is not Instagram's best path to a successful exit. Logically, I think he did it because he's a nice guy.
- joering2 14y ago
  Also worth mention a post than Donna Kline penned: http://www.donnaklinenow.com/investigation/instagram-scam http://www.donnaklinenow.com/investigation/instagram-scam
loceng 14y ago
Indeed - it hasn't cleared, and if it doesn't Facebook still owes them $200 million for the failed buy.
- riffraff 14y ago
  excuse my ignorance of US corporate law, but why would FB owe them $200M for a failed buy?
  - kudos200 14y ago
    It's fairly common in acquisitions for one or both sides to agree to a "break-up" fee to protect against one side getting cold feet, regulatory risks, financing risks, and more. http://blogs.wsj.com/deals/2012/04/25/facebook-ipo-whats-with-that-instagram-breakup-fee/ http://blogs.wsj.com/deals/2012/04/25/facebook-ipo-whats-wit...
  - grabeh 14y ago
    I imagine it's not US corporate law per se, but rather that as part of the agreement, even if the merger isn't cleared, FB still has to pay the $200m although at roughly 20% of the fee it seems a little steep to compensate Instagram for the cost of having to reverse the transaction (not that I'm particularly familiar with the deal terms and associated costs!)
  - alttab 14y ago
    Its essentially a retainer. What if they go through the motions, and then Facebook backs out at the last second? It could have thrown Instagram for a loop, and sometimes an acquisition takes enough resources that it could cost the company money or disrupt their growth or operation. It essentially could prevent frivolous offers from "attacking" competitors by pretending to buy them out, and then not. I guess you could call it "attempted merger".
  - rprasad 14y ago
    It's not a matter of law. It's a "breakup fee" negotiated by Instagram in the event that the acquisition falls through. The purpose of a breakup fee is to compensate the target for costs associated with the failed acquisition and various other losses or expenses. Mostly however, a breakup fee compensates the target for business oppportunities not pursued while the acquisition was being attempted because of the acquisition. In cases where the acquirer is a direct competitor to the target, the breakup fee guarantees that the acquirer can't simply look at the target's books and assets, walk away, and use that knowledge to clone the target's business, without paying for it.

zio99 14y ago

Some sources (the NY Post for example) say the deal may take up to 6 months with a 50% chance of going through. There's some concerns as to whether Instagram may prevent sharing with social networks other than facebook (flickr for e.g.). I'm already booted off instagram without upgrading to the new app, but fear that I'll be forced to share all my instagram pictures on my facebook timeline.

brlewis 14y ago
To prevent sharing out except to Facebook, Instagram would have to disable its API and stop saving photos to Camera Roll. I don't expect either of those to happen. Even if the deal might fall through, I could easily imagine Mike taking a day or two to celebrate instead of jumping back in and answering questions, particularly on the instagram-api list, since nurturing a slowly-growing ecosystem is not Instagram's best path to a successful exit. Logically, I think he did it because he's a nice guy.
joering2 14y ago
Also worth mention a post than Donna Kline penned: http://www.donnaklinenow.com/investigation/instagram-scam http://www.donnaklinenow.com/investigation/instagram-scam

loceng 14y ago

Indeed - it hasn't cleared, and if it doesn't Facebook still owes them $200 million for the failed buy.

riffraff 14y ago
excuse my ignorance of US corporate law, but why would FB owe them $200M for a failed buy?
- kudos200 14y ago
  It's fairly common in acquisitions for one or both sides to agree to a "break-up" fee to protect against one side getting cold feet, regulatory risks, financing risks, and more. http://blogs.wsj.com/deals/2012/04/25/facebook-ipo-whats-with-that-instagram-breakup-fee/ http://blogs.wsj.com/deals/2012/04/25/facebook-ipo-whats-wit...
- grabeh 14y ago
  I imagine it's not US corporate law per se, but rather that as part of the agreement, even if the merger isn't cleared, FB still has to pay the $200m although at roughly 20% of the fee it seems a little steep to compensate Instagram for the cost of having to reverse the transaction (not that I'm particularly familiar with the deal terms and associated costs!)
- alttab 14y ago
  Its essentially a retainer. What if they go through the motions, and then Facebook backs out at the last second? It could have thrown Instagram for a loop, and sometimes an acquisition takes enough resources that it could cost the company money or disrupt their growth or operation. It essentially could prevent frivolous offers from "attacking" competitors by pretending to buy them out, and then not. I guess you could call it "attempted merger".
- rprasad 14y ago
  It's not a matter of law. It's a "breakup fee" negotiated by Instagram in the event that the acquisition falls through. The purpose of a breakup fee is to compensate the target for costs associated with the failed acquisition and various other losses or expenses. Mostly however, a breakup fee compensates the target for business oppportunities not pursued while the acquisition was being attempted because of the acquisition. In cases where the acquirer is a direct competitor to the target, the breakup fee guarantees that the acquirer can't simply look at the target's books and assets, walk away, and use that knowledge to clone the target's business, without paying for it.