The mega-deal bolsters the world's biggest social network – which has more than 1.2 billion members – with the 450-million-strong WhatsApp, which will be operated independently with its own board.
It fits with Facebook founder Mark Zuckerberg's focus on being at the center of lifestyles in which billions of people around the world share their thoughts using smartphones or tablets.
It is Facebook's biggest acquisition and comes less than two years after the California-based Internet star raised $16 billion in the richest tech sector public stock offering.
Zuckerberg said that WhatsApp was worth the steep price because its blistering growth around the globe has it on a clear path to hit a billion users and beyond.
"Services with a billion people using them are all incredibly valuable," Zuckerberg said while discussing the purchase price during a conference call with analysts.
The deal came from a chat Zuckerberg had with WhatsApp co-founder Jan Koum, whom he described as a "valuable thought partner" and friend of many years.
"Last Sunday evening, about 11 days ago, I proposed if we joined together that would help us really connect the rest of the world," Zuckerberg said.
Koum, who joins Facebook's board under the deal, said: "WhatsApp's extremely high user engagement and rapid growth are driven by the simple, powerful and instantaneous messaging capabilities we provide."
In a blog post, Koum added: "Almost five years ago we started WhatsApp with a simple mission: building a cool product used globally by everybody. Nothing else mattered to us."
The tie-up gives WhatsApp "the flexibility to grow and expand," Koum said.
Zuckerberg and Koum, who both took part in the conference call, did not discuss details about WhatsApp revenue, saying the focus for the foreseeable future would be on growth, not making money.
Roger Kay at Endpoint Technologies said the app has become one of the most popular mobile applications worldwide "because it allows you to message anybody anywhere for free."
Kay said the deal makes sense on one level because of Facebook's record stock run-up.
"When you have a stock like that which has run up quickly and created a lot of paper value, it's good to trade that for other value," he told AFP.
"It's not obvious how they can get $12 billion out of this but it's been clear for a while that WhatsApp is very interesting. It reminds me a little bit of Skype."
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