updated 05:35 pm EDT, Mon July 21, 2014
Deal passes final hurdle with California government approval after hearing last week
After a hearing last week with the California Department of Business Oversight, Facebook's $2 billion deal for virtual reality headset maker Oculus VR has officially closed this week. The California government was the final piece of regulation that the companies needed to clear for the offer, first reported in March, to go through.
"We're looking forward to an exciting future together, building the next computing platform and reimagining the way people communicate," said the two companies in a joint statement.
With the final checkpoint cleared, Oculus VR will become a wholly owned subsidiary of Facebook. The Federal Trade Commission (FTC) approved the deal in late April with little fanfare. At the time, Facebook stated it was happy that the FTC approved the deal.
The application for California approval was filed April 11, but the state government didn't hold a hearing over the merger of the two companies until July 15. The merger outlined that a wholly-owned subsidiary of Facebook, Inception Acquisition Sub., would merge into Oculus VR. The resulting entity would then merge into another subsidiary of Facebook, Inception Acquisition Sub II, LLC, which would result in the end of Oculus VR as a separate entity.
Facebook's offer for Oculus VR was first tendered on March 25, offering approximately $2 billion for the company. The deal proposed a payout of $400 million in cash and 23.1 million shares of common Facebook stock. The social media company also outlined incentives in the agreement, allowing an additional $300 million to be earned in cash and stock when achievement milestones were hit.
At first the deal was seen as a bad $2 billion bet placed by Facebook on an industry that faded from the limelight once already. However, since the announcement of the deal, Oculus has been making personnel acquisitions and other deals to strengthen the virtual reality business. From poaching top talent from video game publishers and high profile tech businesses, the company has used ties to Facebook to its advantage.