Home > Business & Strategy > EBay sells majority of Skype stake to private investors for $1.9 billion

EBay sells majority of Skype stake to private investors for $1.9 billion

September 8, 2009 Leave a comment Go to comments

EBay yesterday announced a deal to sell its Skype online calling service to a group of private investors, led by the Silicon Valley private equity firm Silver Lake Partners, reported The New York Times.

The buyers will pay eBay $1.9 billion (Dh6.97bn) in cash, which includes a loan from eBay of $125m, for 65 per cent of the company, the report said.

EBay will retain 35 per cent equity investment in Skype, which is on track to take in more than $600m in revenue this year, the report revealed.

The deal values Skype at $2.75bn, higher than many analysts had expected for the calling service. Many analysts thought eBay grossly overpaid when it acquired Skype in 2005 for $2.1bn.

In addition, the buyer group also includes Andreessen Horowitz, a new venture capital firm headed by the former Netscape co-founder, Marc Andreessen; Index Ventures, a London-based venture capital firm that was an early investor in Skype; and the Canada Pension Plan Investment Board.

“This is a great deal, unlocking both immediate and long-term value for eBay and tremendous potential for Skype,” John J Donahoe, eBay’s Chief Executive, said in a statement. “We’ve acted decisively on a deal that delivers a high valuation, gives us significant cash up front and lets us retain a meaningful minority stake with talented partners.”

EBay acquired Skype in 2005 in a deal that has come to be viewed as one of the most awkward technology pairings of the decade.

Meg Whitman, then eBay’s chief executive, led the charge to acquire Skype for $2.1bn plus bonus incentives for Skype’s shareholders that later increased the price past $3bn.

EBay purchased Skype in 2005 for a price tag that eventually exceeded $3.1bn, including payouts to web entrepreneurs Niklas Zennstrom of Sweden and Janus Friis of Denmark, who founded the company in 2003.

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Categories: Business & Strategy
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