eBay to sell Skype to an investment group

"This is a great deal, unlocking both immediate and long-term value for eBay and tremendous potential for Skype," said eBay President and CEO 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."

"We are extremely fortunate to have such a talented and seasoned group invest in our company," said Josh Silverman, CEO of Skype. "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. With their know‐how helping to guide our vision, Skype is poised to enter the next phase of its growth and development."

Skype is the manufacturer and developer of Skype software, which is used by millions of individuals and businesses to make free video and voice calls, send instant messages and share files with other Skype users. The software also allows users to make low‐cost calls to landlines and mobile telephone lines.

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 said the deal offered by the investor group achieved that.

"Skype Technologies is an innovative, next‐generation technology company that has changed how people and businesses communicate with each other," said Egon Durban, Managing Director at Silver Lake. "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."

"Skype is the archetypal internet phenomenon: a breakthrough technology combining with enormously powerful network effects to revolutionize a gigantic industry," said Marc Andreessen, Co‐Founder of Andreessen Horowitz, a recently launched venture capital firm led by Netscape founder Andreessen and Ben Horowitz.

According to eBay, Skype generated revenues of $551 million in 2008, a 44% increase compared to 2007 and registered Skype users reached 405 million by the end of 2008, a 47% increase from 2007. eBay has projected Skype revenues to exceed $1 billion in 2011.

J.P. Morgan, Barclays and RBC Capital Markets advised Silver Lake and its investor group and have committed to provide the financing necessary to complete the transaction.

Founded in 2002 by Niklas Zennström and Janus Friis, Skype was acquired by eBay in 2005 for $2.6 billion in cash and stock.