Facebook to Buy Kustomer, Start-Up Valued at $1 Billion

[tacobell fan]

Facebook said it would buy Kustomer, a start-up that specializes in customer-service platforms and chatbots, part of an effort by the social-media giant to help companies use its platforms to do business.

Facebook announced the deal in a posting Monday, confirming an earlier report by The Wall Street Journal. Though terms weren't disclosed, people familiar with the matter said it would value New York-based Kustomer at a little over $1 billion.

Closely held Kustomer, whose technology takes conversations from different channels and puts them on a single screen, was valued at $710 million in a private funding round roughly a year ago, according to PitchBook.

Increasingly, customers are communicating with companies by messaging instead of calling. Facebook said more than 175 million people reach out every day to businesses using its WhatsApp messaging service.

Kustomer already has a relationship with Facebook. Its offerings allow companies to aggregate and respond to customer inquiries that come in through Facebook Messenger. In October, Kustomer said it also began integrating with Facebook's Instagram messaging.

Facebook, which has been in the spotlight for its handling of political and other content on its platform, has been making a big push into what Chief Executive Mark Zuckerberghas called "social commerce." This deal could further that effort. In May, the company launched Facebook Shops, which lets businesses create online stores through Facebook and Instagram.

Kustomer was founded in 2015 by Brad Birnbaum and Jeremy Suriel, two entrepreneurs who sold a previous company to Salesforce.com. Kustomer's investors include Coatue Management and Tiger Global Management.

Facebook, which has a market value of over $790 billion, has a long history of deal making, having purchased over 100 companies, according to FactSet. Its highest-profile acquisitions include paying roughly $1 billion for Instagram in 2012 -- far less than what the popular photo- and video-sharing platform is likely worth now -- and around $19 billion for WhatsApp in 2014. In May, it bought Giphy, an online platform where users can search for animated photos known as GIFs, for around $400 million.

JPMorgan Chase & Co. was sole financial adviser to Kustomer.