Facebook just updated their S-1 filling, and if offers some new insight on why it bought Instagram, and it included the structure of the payment.
Facebook paid $300 million in cash for Instagram and 23 million shares of common stock. Facebook has agreed to pay $200 million termination fee to Instagram if the government blocks the deal or if either party terminates the agreement before Dec 20, according to the filling. If taken at $1 billion value, Facebook is assuming a stock price of about $31.
The $31 share price had been mentioned in previous reports, which is used to calculate Facebook's market cap of $75 billion. If Facebook's stock price goes up to $40, than the company's market cap could be as high as $104 billion. Their IPO is set at May 17.
Facebook bought Instagram “as independent mobile applications to enhance our photos product offerings and to enable users to increase their levels of mobile engagement and photo sharing.”