eBay sells 65% of Skype for $2.1b

Dylan Bushell-Embling
telecomasia.net
eBay will sell a controlling stake in VoIP subsidiary Skype in a deal that values the business at $2.75 billion.
 
The buyers, a group of private equity firms led by Silicon Valley-based Silver Lake, will pay $1.9 billion in cash and a $125 million loan from eBay for a 65% stake.
 
eBay will own the remaining 35%. The auction firm bought Skype for more than $3.1 billion in 2005, but later wrote down $900 million as it was unable to extract value out of Skype’s huge user base.
 
“Skype is a strong standalone business, but it does not have synergies with our e-commerce and online payments businesses,” eBay CEO John Donahoe said.
 
eBay announced in April that it planned an IPO for Skype in 2010. But the sale represented better value, said Donahoe.
 
"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.”
 
Skype is now the world's largest international voice carrier, generating nearly 74 billion minutes of use in 2008, according to Telegeography.
 
While 65.5 billion of these minutes were free Skype-to-Skype calls, the company recorded revenues of $551 million last year, up 44%, and eBay predicts its sales will top $1 billion by 2011.
 
Silver Lake said Skype CEO Josh Silverman would remain with the company.
 
Investing alongside Silver Lake are Index Ventures, Netscape founder Marc Andreessen’s Andreessen Horowitz and the Canada Pension Plan.
 
eBay’s share price on Nasdaq fell 2.1% to $21.68 yesterday, but bounced back 1.1% in after-hours trading to $21.91.

 

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