Online auction house eBay has sold the majority of VoIP service Skype to a group of private investors in a deal worth $US1.9 billion, following days of unconfirmed reports on the internet.
The deal comes after eBay announced earlier this year that as part of Skype’s 2010 initial public offering, it would consider bids that offered an “attractive valuation”.
The group of investors, which includes venture capital firms Andreessen Horowitz, Index Ventures and the Canada Pension Plan Investment Board, has purchased approximately 65% of the company.
“This is a great deal, unlocking both immediate and long-term value for eBay and tremendous potential for Skype,” eBay chief executive John Donahoe said in a statement.
“Skype is a strong standalone business, but it does not have synergies with our e-commerce and online payments businesses. As a separate company, we believe that Skype will have the focus required to compete effectively in online voice and video communications and accelerate its growth momentum.”
eBay will receive about $US1.9 billion for the deal, placing Skype’s value at about $US2.75 billion. That figure is still below the $US3.1 billion price tag eBay originally paid, due to devaluations after eBay failed to integrate Skype with some of the site’s services.
But the deal comes after Donahoe said earlier this year that eBay would not sell Skype for less than $US2 billion.
Skype recorded $US551 million in revenue in 2008, with 405 million registered users by the end of 2008. The service currently counts for about 8% of all international voice traffic.
The $US300 million Andreessen Horowitz company, formed by Netscape founder Marc Andreesen and Hewlett-Packard vice president of business technology optimisation Ben Horowitz, has reportedly put forward a commitment of $US50 million. Partner Marc Andreessen currently sits on the eBay board of directors.
The major player in the deal is private equity firm Silver Lake partners, which has reportedly put forward most of the funds. It is unknown how much Index Ventures, an original investor in Skype, or the Canada Pension Plan Investment Board, have put forward.
Egon Durban, Silver Lake managing director, said in a statement the deal will help Skype expand, and praised Skype chief executive Josh Silverman for his leadership.
“This transaction benefits all parties involved and will allow Skype the opportunity to accelerate the growth of its business by harnessing the deep technological and company development expertise that resides within the investor group.”
“Josh Silverman has done a strong job leading the company and we look forward to working with Josh and his team to grow the Skype franchise.”
It is unknown whether the deal will have any effect on a pending court battle that will see eBay and Skype go up against the VoIP service’s original founders.
When eBay originally purchased Skype from Niklas Zennstrom and Janus Friis in 2005, it did not pay for the technology required to run the service, instead opting for a license-based model. But Zennstrom and Friis have now attempted to pull the license, with eBay saying the move could force it to shut Skype down altogether.
“If Skype was to lose the right to use the Joltid software as the result of the litigation, and if alternative software was not available, Skype would be severely and adversely affected and the continued operation of Skype’s business as currently conducted would likely not be possible,” it said.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
