updated 09:30 am EDT, Wed April 18, 2012
Acquisition allegedly came as a surprise
Facebook chief executive Mark Zuckerberg reportedly excluded the company's board of directors from talks that eventually led to the recent Instagram acquisition. An unnamed source familiar with the negotiations told (sub. required) The Wall Street Journal that the board was "told, not consulted" after Zuckerberg privately established an agreement with Instagram co-founder Kevin Systrom.
Rather than involving the board and bringing in outside lawyers or other experts, Zuckerberg reportedly invited Systrom to his Palo Alto home for three days of talks. The parties eventually came to agree on $1 billion as the buyout price, after Systrom initially asked for $2 billion.
Sources suggest that Facebook's board did have the opportunity to vote on the deal, though Zuckerberg controls the majority of the company's voting rights and ultimately could have pursued the buyout even if he faced opposition from board members.
Facebook is said to be utilizing the acquisition to improve its influence on mobile photo sharing, bolstering the features available for users. Instagram is still expected to be available as a third-party app, however, rather than switching solely to a Facebook integrated feature.