EBAY HANGS UP ON SKYPE IN $2BN DEAL
INTERNETauction giant eBay yesterday agreed to sell a majority stake in Skype, its free internet telephone business, to a group of private investors for $2bn (£1.23bn).
The consortium, which is being led by USprivate equity firm Silver Lake, includes Andreessen Horowitz – a firm run by the Netscape co-founder Marc Andreessen – and London-based private equity group Index Ventures.
JP Morgan, Barclays and RBC Capital Markets are backing the investors.
Under the terms of the deal, which values the firm at $2.75bn, eBay will retain a 35 per cent stake in Skype and will receive $1.9bn in cash and a $125m note from the buyers.
The value of the deal is $350m less than eBay paid for Skype four years ago, when it had high hopes for the business.
It originally dreamed of greater synergies between its eBay and PayPal operations and Skype, which charges for calls to regular telephones but provides free computer-to-computer voice, video and text services.
But in 2007 eBay was forced to write down about $1.4bn of its investment and, earlier this year, it announced plans to float the business, signalling that it was open to bids from prospective buyers.
“Skype is a strong standalone business, but it does not have synergies with our e-commerce and online payments business PayPal,” eBay chief executive John Donahoe said yesterday.
“This is a group of investors and industry veterans that have a strong track record of taking the technology companies they own to the next level,” said Skype boss Josh Silverman.
Analysts were surprised at the high valuation of Skype’s business, but said the sale eliminated a lot of the risks associated with an IPO.
Investors also raised concerns over the continued legal battle between eBay and Joltid – owned by Skype’s original founders – over which company owns the rights to the technology which powers Skype.
But Susquehanna Financial Group analyst Marianne Wolk said that eBay’s retention of a Skype stake was positive.