More like this
EBay sells off Skype
The online auction firm has sold a two-thirds stake in Skype to a group of Silicon Valley investors
EBay has sold off a 65 per cent stake in Skype for $1.9bn, valuing the internet telephony business at $2.75bn. That means it has lost money on its investment, after buying it four years ago for more than $3.1bn. The buyers are a group of private equity investors, headed by Californian firm Silver Lake Partners and including the founder of web browser Netscape.
EBay, which had already written down its investment in Skype by $1.43bn, was set to spin the firm off next year, but was open to offers above $2bn after admitting that it was a poor strategic fit with the rest of its business.
The acquisition was designed to allow buyers to communicate using Skype's online telephone capabilities, instead it delivered the headache of managing a largely unrelated entity. It had even said it faced closing down the firm after failing to buy the technology for the service from the founders' firm Joltid and being involved in a court battle over its use.
President and chief executive John Donahoe said: “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. 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."
The auction firm will have nearly $5bn cash on its books after the sale and its fast-growing payment service Paypal to manage.
WHAT THEY ARE SAYING:Lazard Capital Markets analyst Colin Sebastian, in the Times: "Skype is a viable standalone business. It has clear market-share leadership and the margins have turned positive."
Robert Cyran on Breakinviews.com: "Selling a majority of the business to Silver Lake Partners and other investors is not just less distracting and quicker than an IPO of the unit, it actually fetched a good price. It values Skype at a heady four times estimated 2010 sales. Moreover, by retaining a 35pc stake, Ebay has a bit of schmuck insurance in case Skype’s growth, and value, rockets." ·
