eBay Sells Skype

By Stephanie Jordan
in

This week ended speculations that began in January that eBay, Inc. was preparing to sell Skype. At that time, John Donahoe, eBay president and CEO, described Skype as a “great stand-alone business” and told shareholders that “the synergies between Skype and the other parts of our portfolio are minimal. We’re going to continue to run and operate the business. It’s not a distraction currently. And at such time when we have further announcements on that, we’ll let you know.”

On Tuesday, eBay let us know by announcing it signed a definitive agreement to sell its Skype communications unit in a deal valuing the business at $2.75 billion USD. In 2005, eBay acquired Luxembourg-based Skype Technologies SA reportedly for approximately $2.6 billion USD in up-front cash and eBay stock.

In the deal announced this week, eBay will retain approximately 35 percent equity investment in Skype. The 65 percent stake is controlled by an investor group led by investment firm Silver Lake and includes Index Ventures the Canada Pension Plan (CPP) Investment Board, and entrepreneurs and engineers Marc Andreessen and Ben Horowitz.

In the announcement Donahoe notes, “This deal achieves our goal of delivering short- and long-term value to eBay and its stockholders, without the possible delays and market risk of an IPO. Selling Skype now at this great valuation, while retaining an equity stake, makes sense for the company. And it allows us to focus all of our energies on the opportunities in front of PayPal and eBay.”

eBay is expected to receive approximately $1.9 billion USD in cash upon the completion of the sale and a note from the buyer in the principal amount of $125 million USD. The transaction is expected to close in the fourth quarter of 2009.

Published September 3, 2009