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Facebook Agrees to Buy Instagram Photo App for $1 Billion

Facebook Inc., the biggest social-networking service, is buying the Instagram mobile photo-sharing application for about $1 billion in cash and stock, using its biggest acquisition yet to lure users of mobile devices.

Instagram, owned by San Francisco-based Burbn Inc., was valued at $500 million after raising about $60 million last week from investors including Sequoia Capital, said people with knowledge of the funding who asked not to be identified because the matter is private. The acquisition is expected to close this quarter, Menlo Park, California-based Facebook said today.