eBay Sells Majority Stake in Skype, Shelves IPO

123jump.com Staff
01 Sep, 2009
New York City

eBay after struggling for four years to realize synergies between the action market operations and communication company Skype agreed to sell a majority stake. The consortium of investors agreed to pay $2 billion for 65% stake in Skype. Earlier eBay had planned to spinoff Skype in a public offering.

[R]10:45 AM New York - eBay after struggling for four years to realize synergies between the action market operations and communication company Skype agreed to sell a majority stake. The consortium of investors agreed to pay $2 billion for 65% stake in Skype. Earlier eBay had planned to spinoff Skype in a public offering.[/R]

eBay Inc ((EBAY)) increased 1.9% to $22.53 after it agreed to sell a majority stake in the communication company Skype. The private equity investment consortium will pay $1.9 billion cash that includes $125 loan from eBay.

eBay will retain 35% stake in the company.

The consortium of investors includes original investors in Skype, Marc Andreessen, co-founder of Netscape and now heading Andreessen Horowitz venture capital group and the Canada Pension Plan Investment Board.

Silicon Valley, California based private equity investment firm Silver Lake Partners will lead the investment group.

eBay acquired Skype in 2005 for $2.1 billion with performance bonuses that lifted the total acquisition cost to $3 billion and hoped that integrating the online communication capabilities will help buyers and sellers negotiate transactions on eBay.

In its latest quarterly results eBay noted that Skype added 57.3 million users to a total of 480.5 million and revenues increased 25% to $170 million.

Earlier eBay had announced a public offering plan for Skype and expected valuation to exceed $2 billion.

In an effort to prevent Google from getting its hands on Skype, eBay negotiated Skype purchase that permitted its founders Janus Friis and Niklas Zennstrom to retain control of its core peer-to-peer technology.

The founders of Skype and eBay are battling in British court to determine who has the right to make changes to this original technology.