EBay has signed a definitive agreement to sell its Skype communications unit to an investor group led by Silver Lake.
Under the terms of the deal, eBay will receive approximately $1.9 billion in cash, a note from the buyer group for $125 million. It will retain approximately a 35% equity investment in Skype. EBay said the deal values Skype at $2.75 billion.
The deal is expected to close in the fourth quarter. The other parties making up the investor group include Index Ventures, Andreessen Horowitz and the Canada Pension Plan Investment Board.
Skype, which is a telecommunications services provider that uses software enabling phone calls to be made over the Internet, was acquired by eBay in 2005 for $2.1 billion. Recent innovations have included improved video and calling quality, a Skype iPhone app and mobile partnerships with Nokia and Hutchison. Skype generated revenues of $551 million in 2008, a 44% increase compared to 2007.
“Skype is a strong standalone business, but it does not have synergies with our e-commerce and online payments businesses,” said John Donahoe, president and CEO at eBay, in a statement. “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.”
The move also enables eBay to focus its “energies on the opportunities in front of PayPal and eBay,” he continued.
EBay announced plans to separate Skype from the company in April with an IPO in 2010. The company considered bids for Skype during the process and accepted the Silver Lake bid because it offered an attractive valuation.
“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,” Donahoe said in a statement.
