Waze is based in Israel. Three reports in the Israeli press indicate negotiations are underway.
A source told TechCrunch that the sticking point is less about money and more about location, location, location. The question is whether or not to keep Waze in Israel or move it to the U.S., as Facebook did with two previous acquisitions of Israeli companies.
Those two were of feature phone interface developer Snaptu (acquired for up to $70 million in March 2011) and facial recognition firm Face.com (acquired in June 2012 for $50 - 60 million).
It wouldn't be Facebook's first huge acquisition. Just over a year ago, prior to its IPO, Facebook bought Instagram for $1 billion. That deal included a large amount of stock; it ended up being worth somewhere around $747 million -- due to Facebook's famous stock decline -- when it was finally approved.
Waze is a free mobile app on iOS, Android, and Windows Phones. It's more than just a Google Maps (or Apple Maps) clone, as it adds a social aspect to its navigation: Fellow Waze users can share traffic jams, accidents, police presence, and more, which are reported to users as they travel through the affected areas.
In addition, as Wazers use the app and make reports, they earn points. Those add a sort of competition to the app, as users can move up through various levels.
Waze now has around 45 million users. Its navigation does leave something to be desired, as when it routes users to destinations, it will sometimes direct them through circuitous routes to avoid traffic, rather than give a user a straightforward route.
There were earlier rumors that Apple was looking to buy Waze as a quick fix for its Maps app issue.