As it turns out, the deal is rumored to have been $500 M as previously discussed. However, the terms of the deal are reported to be $100 M in cash and $400 M in Facebook stock. Right or wrong, Twitter valued the shares of Facebook at only $50 M for a total deal value of $150 M.
Twitter has only been around for 2 years and has become an blackberry-like addiction for its users. Based on its rapid adaption rate, investors and others don't seem to worry about the lack of business model, largely pointing to the fact that Google didn't have a revenue model when it started either.
Along these lines, Twitter is expected to announce a business model sometime next year and seems to be getting major industry attention. It is not unlikely that Twitter could ultimately be valued substantially higher than Facebook's offer.
Photo from Business Week.