eBay has officially announced it is selling most of Skype, its Internet phone business, to a group of investors led by Silver Lake.
The deal values Skype at $2.75 billion. eBay will receive $1.9 billion in cash and a $125 million note. It will also retain a 35% stake in Skype.
Reports had suggested eBay was seeking a valuation around $2 billion, so this is a positive. Shares spiked up immediately after the deal was announced and are now trading up around 3%.
Other investors in the deal include Index Ventures, an early Skype backer; the Canada Pension Plan; and Andreessen Horowitz, a venture capital firm cofounded by eBay board member (and Netscape founder) Marc Andreessen.
Here’s how eBay’s press release frames Skype:
In 2008, Skype generated revenues of $551 million, a 44 per cent increase compared to 2007. Total eBay Inc. revenues for 2008 were $8.5 billion. Registered Skype users reached 405 million by the end of 2008, a 47 per cent increase from 2007. Skype is attracting hundreds of thousands of new users each week.
eBay bought Skype for $3.1 billion in 2005, but later wrote down $900 million of Skype’s value.
Earlier this year, it announced plans to spin Skype off in an IPO next year. But that was just as likely a move to start the bidding for Skype. Indeed, the business drew several interested parties, including a group led by Skype’s founders. Even Google sniffed at Skype, the New York Times reported today. But Google walked away, worried about a legal battle between Skype and its founders, and that owning Skype might sour its relationships with mobile carriers.
It became obvious long ago that running an Internet phone company wasn’t going to help eBay’s struggling e-commerce business. But it’s also possible that Skype will continue to disrupt phone companies and grow much bigger, so it’s not a huge surprise that eBay chose to retain such a large stake.
Disclosure: Marc Andreessen is an investor in The Business Insider.
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