NEW YORK (TheStreet) Facebook (FB - Get Report) just announced the acquisition of virtual reality company Oculus VR, maker of the popular Oculus Rift virtual reality platform, for $2 billion in cash and stock.
In a press release, Facebook revealed that the purchase includes $400 million in cash and 23.1 million shares, valued at $1.6 billion. The company also noted there's a provision for an additional $300 million earn-out in cash and stock based on certain milestones. Facebook said it expects to close the deal in the second quarter of this year.
Shares of Facebook were slightly lower in after-hours trading, off 0.51% to $64.56.
Oculus is best known for its' virtual reality headset, the Oculus Rift. "While the applications for virtual reality technology beyond gaming are in their nascent stages, several industries are already experimenting with the technology, and Facebook plans to extend Oculus' existing advantage in gaming to new verticals, including communications, media and entertainment, education and other areas," the company said in the release. "Given these broad potential applications, virtual reality technology is a strong candidate to emerge as the next social and communications platform."
"Mobile is the platform of today, and now we're also getting ready for the platforms of tomorrow," said Facebook founder and CEO, Mark Zuckerberg in the press release. "Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate."
In a post to his Facebook account, Zuckerberg talked about the possibilities of the transaction, by bringing Oculus under Facebook's umbrella:
I'm excited to announce that we've agreed to acquire Oculus VR, the leader in virtual reality technology.
Our mission is to make the world more open and connected. For the past few years, this has mostly meant building mobile apps that help you share with the people you care about. We have a lot more to do on mobile, but at this point we feel we're in a position where we can start focusing on what platforms will come next to enable even more useful, entertaining and personal experiences.
This is where Oculus comes in. They build virtual reality technology, like the Oculus Rift headset. When you put it on, you enter a completely immersive computer-generated environment, like a game or a movie scene or a place far away. The incredible thing about the technology is that you feel like you're actually present in another place with other people. People who try it say it's different from anything they've ever experienced in their lives.
Oculus's mission is to enable you to experience the impossible. Their technology opens up the possibility of completely new kinds of experiences.
Immersive gaming will be the first, and Oculus already has big plans here that won't be changing and we hope to accelerate. The Rift is highly anticipated by the gaming community, and there's a lot of interest from developers in building for this platform. We're going to focus on helping Oculus build out their product and develop partnerships to support more games. Oculus will continue operating independently within Facebook to achieve this.
But this is just the start. After games, we're going to make Oculus a platform for many other experiences. Imagine enjoying a court side seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face-to-face -- just by putting on goggles in your home.
This is really a new communication platform. By feeling truly present, you can share unbounded spaces and experiences with the people in your life. Imagine sharing not just moments with your friends online, but entire experiences and adventures.
These are just some of the potential uses. By working with developers and partners across the industry, together we can build many more. One day, we believe this kind of immersive, augmented reality will become a part of daily life for billions of people.
Virtual reality was once the dream of science fiction. But the internet was also once a dream, and so were computers and smartphones. The future is coming and we have a chance to build it together. I can't wait to start working with the whole team at Oculus to bring this future to the world, and to unlock new worlds for all of us.
"We are excited to work with Mark and the Facebook team to deliver the very best virtual reality platform in the world," said Brendan Iribe, co-founder and CEO of Oculus VR in the release. "We believe virtual reality will be heavily defined by social experiences that connect people in magical, new ways. It is a transformative and disruptive technology, that enables the world to experience the impossible, and it's only just the beginning."
Oculus will maintain its headquarters in Irvine, CA, and will continue development of the Oculus Rift, its ground-breaking virtual reality platform.
Facebook will hold a conference call at 6:15 P.M. EDT to discuss the transaction.
--Written by Chris Ciaccia in New York
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