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The Real Reason On Why Facebook Agreed To Pay A Lot More For Oculus

By Cameron , Jan 19, 2017 08:35 PM EST
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In the light of Facebook CEO Mark Zuckerberg's testimony during the court hearing last January 17 as part of the lawsuit by Zenimax against Oculus for allegedly stealing software and trade secrets, he has shared some interesting information that surprised many people.

What Happened?

Back in 2014, Facebook announced it has acquired Oculus for approximately $2 billion which included $400 million in cash and 23.1 million shares of Facebook stock. There was also an additional $300 million potential earn-out in cash and stock based on "the achievement of certain milestones."

However, during the testimony of Mr. Zuckerberg last January 12, 2017, new details were unfolded as to how his company purchased the VR tech. In his testimony, Mr. Zuckerberg told the court in hearing that Facebook agreed to pay an extra $700 million in employee retention bonuses for certain "key people" which was clearly not mentioned in the past and caused quite a stir. As to who were these key people, there is no information of the exact names.

So Why Did Facebook Disclosed The Information About The $700 Million Retention Bonus?

According to bankers, lawyers and analysts that Tech Crunch spoke to, the actual prices paid for a company and what the public sees in headlines are rarely the same. The $700 million retention bonus that Mr. Zuckerberg was referring to in the court hearing takes into account the ongoing costs following the closing of the deal. These costs are not typically considered in the purchasing price, because these are paid out eventually over time.

The article then further stated (based on one of the bankers claim) that though it was "shockingly big," the money that was set aside was probably for certain key Oculus employees who chose to continue to work at Facebook and have been separated out from the purchasing of the company which is said to be a "not uncommon" practice. They are often viewed in a different category.

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