In another example of how Facebook is using its soaring share price to acquire new technologies, Facebook CEO Mark Zuckerberg announced Tuesday that the company is acquiring Oculus VR.
Facebook is paying for the company with 23.1 million shares of Facebook stock and about $400 million in cash. The agreement also provides for an additional $300 million earn-out in cash and stock based on the achievement of certain milestones, Facebook reports.
The deal comes at a time when other large consumer electronics companies, including Sony, are paying closer attention to virtual reality technologies, which have become smaller and more feasible as computer processing power has dramatically improved.
In a blog post announcing the deal, Zuckerberg explained that while they continue to be very focused on mobile, "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" like the Oculus virtual reality headsets.
The initial focus will be on immersive gaming. "Oculus already has big plans here that won't be changing and we hope to accelerate," wrote Zuckerberg, who added however that "this was just the start."
"After games, we're going to make Oculus a platform for many other experiences," he added. "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."
"We are excited to work with Mark and the Facebook team to deliver the very best virtual reality platform in the world," added Brendan Iribe, cofounder and CEO of Oculus VR in a statement. "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, Calif.
The transaction is expected to close in the second quarter of 2014.