eBay has agreed to sell a controlling 65 percent stake in its Skype communications division to an investor group led by private equity firm Silver Lake Partners, but will retain 35 percent of the online telephone service it acquired in 2005. Andreessen Horowitz, a venture-capital firm led by Netscape cofounder Mark Andreessen, is among the investors.
When the deal is complete, likely in the fourth quarter, eBay will receive $1.9 billion and a note for $125 million.
“This is a great deal, unlocking both immediate and long-term value for eBay and tremendous potential for Skype,” said eBay CEO John Donahoe. “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.”
Licensing Woes
In 2008, Skype generated revenue of $551 million for eBay, a 44 percent increase compared to prior-year results. This year, Skype’s contribution in the economically challenged second quarter grew 25 percent year over year to $170 million, even as it added 37.3 million registered VoIP users worldwide.
However, eBay told the Securities and Exchange Commission in its annual report that Skype currently faces regulatory, intellectual property, competitive and other risks that threaten the service’s financial performance. Among other things, Skype could lose its license for the peer-to-peer technology that empowers the world’s largest international phone service.
As part of eBay’s acquisition of Skype in 2005 in a cash-plus-stock deal, Skype founders Niklas Zennstrom and Janus Friis retained ownership of the core peer-to-peer technology behind the world’s number-one international phone service. The technology’s key patent now belongs to U.K.-based Joltid Ltd., which alleges that Skype has breached its licensing terms on the basis of copyright infringement as well as its misuse of confidential information. The case is scheduled to be heard in a U.K. court…