eBay completes sale of Skype

20 Nov 2009

Web-auction giant eBay has completed its sale of online telephony player Skype to an investor group led by Silver Lake and including two of Skype’s founders in a deal valuing the business at US$2.75 billion.

Under the terms of the deal, Skype’s buyer will control about a 70pc stake in Skype, with eBay retaining a 30pc equity investment in the company.

eBay is due to receive about US$1.9 billion in cash for the sale of Skype and a note from the buyer in the principal amount of US$125 million.

The sale comes three years after eBay bought Skype for a total sum of US$3.1 billion, if payments to founders are included.

The deal was previously announced in September and, at the time, eBay president and CEO John Donahoe said it was a “great deal” that unlocked “both immediate and long-term value for eBay and tremendous potential for Skype”.

“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,” he noted.

In 2008, Skype generated revenues of US$551 million, a 44pc increase compared to 2007. Total eBay Inc revenues for 2008 were US$8.5 billion. Registered Skype users reached 405 million by the end of 2008, a 47pc increase from 2007.

Article courtesy of businessandleadership.com