Facebook’s $60m bid for Titan Aerospace
Today’s big news is all about acquisitions. We’re already in the midst of the biggest M&A boom since 2007, with deal-making activity totaling $511.4bn at the end of February, according to Thomson Reuters and it shows no sign of letting up in the tech space.
Facebook has entered into talks to take over Titan Aerospace, a US-based aerospace company which produce solar-powered drones which can reach near orbital heights. The deal is thought to be worth around $60million – a much lower amount than recently payed out for the acquisitions of WhatsApp and Instagram. But why do Facebook want it?
Internet For Everyone
Back in August 2013, Facebook, along with Samsung, Ericsson, Nokia and three other mobile phone companies set up the Internet.org initiative, aiming to provide internet access to the billions of people in the world who still lack connectivity through making it more affordable and more efficient. The acquisition of Titan Aerospace will give Facebook access to the drones, which may then act as cheaper alternatives to satellites, beaming wireless internet access to parts of the world.
It all sounds like a very altruistic move on Facebook’s side, but some might say that this acquisition is just a move to create shared value and boost share prices; an argument which gains traction with Facebook’s share prices jumping by more than 2.6% today. In fact, this acquisition may have more to do with Facebook’s visions for WhatsApp than just as a response to Wall Street’s lukewarm reaction to that particular acquisition.
The acquisition of WhatsApp, and the potential acquisition of Titan Aerospace all fall under Facebook’s goal to bring internet connectivity to the wider market. By providing developing nations with cheaper internet access, it can capitalize with a basic version of WhatsApp and Facebook – allowing gateway access and providing many peoples’ first internet experience to be with Facebook products. That’s five billion peoples’ first time, according to Google, or two-thirds of the world.
The Race for the Skies
Of course, Facebook aren’t the only ones venturing into this territory. In July last year Google’s innovation lab, Google [x], announced details of a similar initiative called Project Loon. Whilst still in a testing phase, Project Loon launched 30 super-pressure balloons into the skies, each carrying electronics including flight computers, communications antennae and solar power stations. The aim was similar, deliver low cost internet access to remote and underserved places in the world.
At the time, Nigel Snoad, Google Project Loon team member commented on the innovation, “We want to keep them up there, floating around for eventually up to 100 days.” And herein lies Facebook’s triumph- Titan Aerospace’s drones are capable of staying up to 20km in the sky for five years. For now, Facebook certainly seem to have stolen a march on their rivals in the race for the skies.
(Photo credit: Titan Aerospace)