The online publication has reported that the deal cost considerably less due to Facebook's falling share price, which has dropped by nearly 50 per cent since its famed $104 billion (£65 billion) flotation in May.
According to the social network's quarterly earnings, the firm has already paid $521 million (£324 million) for Instagram - $300 million (£186 million) in cash and the remainder in Class B common stock, which cannot be publicly traded.
The company also issued approximately 11 million unvested Class B shares to Instagram stockholders, which are expected to be worth a total of $194 million (£121 million) over the next three years.
Earlier this week, 28-year-old Facebook CEO and creator Mark Zuckerberg announced that Instagram now has 100 million users, up from the 27 million it had when Facebook bought the company.
Yesterday, Facebook shares soared for the first time in months after it announced better-than-expected growth in its mobile advertising.
Investors rushed to buy shares, pushing the price up by 22 per cent after the company revealed it made $150 million (£94 million) from mobile ads in the last three months.
Zuckerberg said that mobile was the "most misunderstood aspect" of the company and insisted that the future of Facebook now depends on making money from its mobile service.