eBay sells majority Skype stake for USD1.9bn

eBay is selling a 65% majority stake in internet call service Skype for USD1.9bn in a deal that values the firm at USD2.75bn. A consortium of investors led by technology-focused investment firm Silver Lake is buying the shares. eBay is retaining a 35% stake in the firm.

The deal is expected to close in Q4 2009. Though the agreement values Skype far below the USD4.1bn eBay paid for the company in 2005, the terms come in above many analyst expectations, pushing shares in eBay up by 4.7% in mid-day trading.

Confirmation of the deal follows months of speculation about the future of Skype, prompted by eBay's announcement in April that it planned to spin-off the call unit through an initial public offering (IPO) in the first half of 2010. Skype's new owners include Index Ventures, one of Skype's earliest investors, and Andreessen Horowitz, the recently established USD300m investment fund set up by Netscape founder Marc Andreessen. The Canada Pension Plan Investment Board (CPP) takes the final position in the consortium.

eBay president and CEO John Donahoe says the agreement unlocks "both immediate and long-term value for eBay and tremendous potential for Skype".

"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," Donahoe adds.

eBay's admission that Skype does not fit with its other online assets kick-started the review process for the business earlier this year. In spite of this, Skype made USD551m in revenues in 2008, a 44% increase on 2007's revenues, and expects to gross upwards of USD1bn in 2011.