Until recent months, Facebook (NASDAQ:FB) primarily had made small acquisitions, with a focus on getting top-notch engineers. So when Facebook’s CEO and co-founder Mark Zuckerberg shelled out about $1 billion for Instagram, the deal at the time seemed more like an anomaly.
Now, it looks like it might have been the beginning of a strategy shift.
Currently, the buzz is that Facebook might shell out another billion dollars for Opera Software. Founded in 1994, Opera develops browsers for desktops and mobile devices. However, the company is still a tiny player, with less than 2% of global market share, and it competes against giants like Microsoft‘s (NASDAQ:MSFT) Internet Explorer, Google‘s (NASDAQ:GOOG) Chrome and Apple‘s (NASDAQ:AAPL) Safari.
Shares of Opera, which are listed on the Oslo exchange, have jumped over 20% on the news.
However, even in the mobile segment, Opera is losing its edge. Over the past year, its market share plunged by half to 12%. The big reason is the rapid growth in Apple’s Safari browser.
So then why would Facebook want to buy Opera? Well, if the social media king is serious about developing a smartphone, it will need a browser. Buying Opera would be an effective way to get into the market.
At the same time, a deal may also help Facebook monetize its mobile traffic. By controlling the browser, Facebook may have more opportunities to place ads. Keep in mind that Opera already has a sophisticated mobile ad network.
Yet a deal may not necessarily happen. After all, Opera founder Jon S. von Tetzchner has made it clear he’s focused on the long term. But then again, it may ultimately be a clever ploy to boost the valuation even more. As seen with the Instagram deal, Zuckerberg isn’t afraid to pay up for deals.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.