Facebook Snaps Up Oculus In $2 Bln. Deal

(RTTNews) - Facebook Inc (FB) Tuesday agreed to acquire Oculus VR Inc, a virtual reality technology company, for about $2 billion as well as a $300 million earn-out in cash and stock based on certain milestones.

The deal comes as Facebook perceives strong potential for virtual reality technology to emerge as the next social and communications platform.

Oculus is developing an upcoming virtual reality head-mounted display for which developers have evinced strong interest. Called the Oculus Rift, the headset has orders for over 75 thousand development kits.

"Mobile is the platform of today, and now we're also getting ready for the platforms of tomorrow," said Facebook founder and CEO Mark Zuckerberg in a statement.

Facebook will offer $400 million in cash and 23.1 million shares of Facebook common stock valued at $1.6 billion, for the deal.

The transaction is expected to close in the second quarter of 2014.

Virtual reality technology applications mainly pertain to gaming, but Facebook believes that industries are working with the technology and that applications could expand to new verticals including communications, media and entertainment.

Oculus was started after founder Palmer Luckey raised over $2.4 million in funding from a Kickstarter campaign. Oculus will continue to be based in Irvine, California.

Internet firms are showing passion for promising tech start-ups. In Feb, Facebook agreed to buy mobile messaging start-up WhatsApp for about $16 billion in what is its biggest acquisition so far. In 2012, the company bought photo sharing start-up Instagram for $1 billion.

The WhatsApp deal further cast Zuckerberg into the limelight, making investors and industry peers guess as to which company Facebook is going to acquire next. But Zuckerbert recently said that WhatsApp is going to be its biggest buy for some time to come.

Facebook stock closed Tuesday at $64.89, up $0.79 or 1.23%, on a volume of 66 million shares on the Nasdaq. In after hours, the stock dropped $0.50 or 0.77% at $64.39.