Facebook, the world's largest social networking site, has announced it will buy smartphone photo-sharing company, Instagram, for $1bn, making it its largest acquisition ever.
"This is an important milestone for Facebook because it's the first time we've ever acquired a product and company with so many users," Mark Zuckerberg, Facebook co-founder, said on Monday.
"But providing the best photo-sharing experience is one reason why so many people love Facebook and we knew it would be worth bringing these two companies together."
California-based Facebook is paying cash and stock for San Francisco-based Instagram and hiring its entire team as part of the deal, which is expected to close by the end of June.
Instagram’s free mini-programme, which lets people give classic looks to square photos using "filters" and then share them at Twitter, Facebook or other social networks, has gained about 30 million users since it first launched in January last year.
"We're psyched to be joining Facebook," Kevin Systrom, Instagram's co-founder, said in a blog post Monday at the Instagram website.
"We'll be working with Facebook to evolve Instagram and build the network."
The social networking giant said it plans to keep Instagram running independently.
“We think the fact that Instagram is connected to other services beyond Facebook is an important part of the experience,'' Zuckerberg wrote.
The surprise announcement comes before the social network nears an initial public offering.
Facebook in February filed for a stock offering and could raise as much as $10bn in the largest flotation ever by an internet company on Wall Street.
The leading social network said it has more than 845 million users, including 483 million who log in daily.
Facebook's value has been estimated at between $75bn and $100bn.