UPDATE: EBay strikes deal to sell Skype

 

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By Barry Collins

Posted on 1 Sep 2009 at 08:17

Auction house eBay has sold a 65% stake in internet telephony service Skype for $1.9 billion.

EBay has been looking to dispose of the loss-making VoIP service since last year, and was planning to spin-off the Skype division with an initial public offering (IPO) next Spring.

However, eBay has cut to the chase and sold Skype to a group of private investors including Andreessen Horowitz, the venture capital firm established by former Netscape co-founder Marc Andreessen, and former Skype director Mike Volpi.

The $1.9 billion selling price represents a desperately poor return on investment for eBay, which paid more than $3.1 billion to acquire Skype and has been forced to write down the value of the company by more than $900 million since the 2005 purchase.

In saying that, eBay will retain a 35% stake in the business which earned $551 million in 2008, a 44% increase compared with 2007.

The New York Times reports that Google was also offered the opportunity to buy Skype, but the search giant turned down the deal because it was worried about the prospect of future litigation. EBay recently admitted that it was working on developing new software for Skype because it faced losing some of the technology in a legal battle with Skype co-founders Niklas Zennstrom and Janus Friis.

The involvement of Mike Volpi, who was a close relationship with Zennstrom and Friis, should help avert the threat of legal action for the new owners.

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