Why buy a business with $20mil revenue for $19 BILLION?!

After Facebook’s acquisition of WhatsApp, I thought this made an interesting exam question. I've compiled a PowerPoint (Facebook_Whats_app.ppt) with graphs and hyper-links and asked students to research the facts behind the purchase. The main reasons seem to be:WhatsApp exponential growth was becoming a threatFacebook’s “determination to be the 'next' Facebook”!WhatsApp's comparative success in EuropeMessaging companies becoming the social networks of choice for the youngGoogle tried and failedWhilst Facebook's share price fell and then recovered after the purchase, analyst Ian Maude stated "expensively buying every competitor does not feel like a long term strategy". Are Facebook, like Apple, losing their competitive edge?Hope it helps.