Photo-sharing company Instagram's CEO Kevin Systrom had verbally agreed to a $525 million deal with Twitter before accepting the $1 billion offer from Facebook, the New York Times reported. The exposure may invite certain legal concerns for both Instagram and Facebook because Systrom had testified at a hearing of the California Corporations Department in August that the company "never received any offers," before the Facebook deal.
The report revealed that Instagram management had agreed to a $525 million cash-and-stock deal just weeks before the photo-sharing startup accepted an acquisition offer by Facebook. "When asked if his company had received any offers besides Facebook's at the time of the negotiations, Mr. Systrom said, "No, we never received any offers," according to transcripts of the hearings. He said Instagram had "talked to other parties, but never received any formal offers from anybody else," The New York Times reported.
Quoting several unnamed sources and certain documents obtained, the report revealed that Systrom and Mike Krieger, the other founder of Instagram, held several meetings as late as March with top Twitter executives. On March 20, Systrom informed Twitter that he and Krieger had thought about the offer and would remain independent. However, in less than three week's time, Instagram accepted the Facebook offer negotiated personally by Facebook's chief executive, Mark Zuckerberg. According to the deal, Instagram was offered $300 million in cash and the rest in Facebook stocks.
Twitter did not get an opportunity to provide a counteroffer. In fact, Instagram lost a chance to make more money off the acquisition because the microblogging website was ready to make a higher offer.
Instagram and Twitter have been squabbling with each other for a while now. Earlier this month, the face-off between the two turned full-scale when Instagram removed their images from Twitter. Twitter was quick in countering the Instagram move by showing off its very own mobile photo filtering and enhancement app the very next day.
