eBay to sell Skype... Deal puts Skype value at $2.75 Billion

By: Richard Brewer-Hay

eBay announced back in April that it planned to separate Skype from the company with anticipation of an IPO in 2010. A lot can happen in a few months. According to a press release issued by eBay this morning, an investor group led by Silver Lake, that includes Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board, will purchase Skype giving them 65% ownership of the communications business.

Skype

From the release: “As it prepared for an IPO, eBay said it would naturally consider bids for Skype that offered an attractive valuation. John Donahoe said the deal offered by the investor group achieved that.”

eBay will receive approximately $1.9 billion in cash when the sale goes through in addition to a note in the principal amount of $125 million. eBay will also retain a 35% equity investment in Skype. The deal is expected to close in Q4 of 2009.

“This is a great deal, unlocking both immediate and long-term value for eBay and tremendous potential for Skype,” said eBay Inc. 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.”

Skype generated revenues of $551 million in 2008, a 44% increase from 2007. Registered users reached 405 million by the end of 2008, a 47% increase from the year before. eBay announced in March of this year that it expects Skype to top $1 billion in revenue in 2011, nearly doubling 2008 revenues.

I’ll update the post with new information as I receive it.

Cheers,
RBH