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eBay sells 70% of its stake in Skype for $2 billion

eBay has sold 70 per cent of its stake in Skype for $1.9 billion in cash and a note of $125 million to an investor group led by Silver Lake and participated by Joltid, Canada Pension Plan Investment Board and Andreessen Horowitz. The company will retain 30 per cent stake in Skype. The deal values the internet calling service at $2.75 billion.

eBay has sold 70 per cent of its stake in Skype for $1.9 billion in cash and a note of $125 million to an investor group led by Silver Lake and participated by Joltid, Canada Pension Plan Investment Board and Andreessen Horowitz. The company will retain 30 per cent stake in Skype. The deal values the internet calling service at $2.75 billion.

“Skype is a strong standalone business, but it does not have synergies with our e-commerce and online payments businesses,” John Donahoe, president and CEO, eBay, recently said. “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.”

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. According to John Donahoe, the deal offered by the investor group achieved that.

eBay had acquired Skype in 2005 by paying $3.1 billion to its founders Niklas Zennstrom and Janus Friis. In 2008, Skype generated revenues of $551 million, 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. Skype is claimed to attract hundreds of thousands of new users each week.

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