eBay has signed a definitive agreement to sell its Skype communications unit in a deal valuing the business at USD2.75bn.
eBay has signed a definitive agreement to sell its Skype communications unit in a deal valuing the business at USD2.75bn.
The buyer, who will control an approximately 65 per cent stake, is an investor group led by Silver Lake and includes Index Ventures, Andreessen Horowitz and the Canada Pension Plan Investment Board.
eBay is expected to receive approximately USD1.9bn in cash upon the completion of the sale and a note from the buyer in the principal amount of USD125m. The company will retain an approximately 35 per cent equity investment in Skype. The transaction, which is not subject to a financing condition, is expected to close in the fourth quarter of 2009.
‘This is a great deal, unlocking both immediate and long-term value for eBay and tremendous potential for Skype,’ says eBay president and chief executive John 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 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.’
Egon Durban, managing director at Silver Lake, says: ‘Skype is an innovative, next-generation company that has changed how people and businesses communicate with each other. 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.’
In April 2009, eBay announced plans to separate Skype from the company, beginning with an IPO in 2010. The decision followed a year-long review of Skype within eBay’s portfolio. As it prepared for an IPO, the company said it would naturally consider bids for Skype that offered an attractive valuation. Donahoe says the deal offered by the investor group achieves that.
‘This deal achieves our goal of delivering short- and long-term value to eBay and its stockholders, without the possible delays and market risk of an IPO,’ adds Donahoe. ‘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.’
Skype was acquired by eBay in 2005. In 2008, Skype generated revenues of USD551m, a 44 per cent increase compared to 2007. Registered Skype users reached 405 million by the end of 2008, a 47 per cent increase from 2007.
