Private equity consortium acquires 70% stake in Skype Technologies from eBay

eBay, Inc. has completed the sale of approximately 70% stake in its Luxembourg-based communications unit Skype Technologies S.A. to an investor group led by Silver Lake Partners including Joltid Limited and certain affiliated parties, Andreessen Horowitz and the Canada Pension Plan Investment Board (CPPIB). eBay received approximately $1,900 million in cash and a note from the buyer in the principal amount of $125 million.

Skype is a web-based telecommunication services provider, while eBay is a provider of online marketplace for the sale of goods and services.

Andreessen Horowitz is a venture capital firm, while Silver Lake Partners is a private investment firm. CPPIB is a professional investment management organization. eBay, Andreessen Horowitz and Silver Lake Partners are based in the US.

Update on November 6, 2009:

eBay announced that the investor group led by Silver Lake Partners has reached a settlement agreement with Joltid Limited and Joost N.V. that gives Skype ownership over all software previously licensed from Joltid and ends all litigation currently pending against the investor group and eBay at the closing of the acquisition.

As part of the settlement agreement, Joltid and Skype founders Niklas Zennstrom and Janus Friis will join the investor group, contributing Joltid software and making a significant capital investment in exchange for a 14% stake in Skype. As a result, Silver Lake and other investors including Andreessen Horowitz and CPPIB, will together hold 56% of Skype and eBay will retain 30%. The investor group will no longer include Index Ventures, which has withdrawn from participation.

Announcement (September 1, 2009):

eBay has signed a definitive agreement to sell a 65% stake in Skype Technologies to an investor group.

eBay is expected to receive approximately $1,900 million in cash upon the completion of the sale and a note from the buyer in the principal amount of $125 million. eBay will retain an approximately 35% equity investment in Skype. The transaction is expected to close in the fourth quarter of 2009.

Rumor (August 28, 2009):

According to TechCrunch, eBay is planning to sell Skype to a group of venture capital and private equity firms.

Andreessen Horowitz, Silver Lake Partners, and Index Ventures are likely to be among the investors in the group. Reportedly, the transaction is valued at a minimum of $2,000 million.

Goldman Sachs is acting as financial advisor, while Clifford Chance LLP, Sidley Austin LLP and Dewey & LeBoeuf LLP are acting as legal advisors to eBay on this transaction.

J.P. Morgan, Barclays and RBC Capital Markets are acting as financial advisors to investor group. Sullivan & Cromwell LLP, Simpson Thacher & Bartlett LLP, Bird & Bird LLP and Michael Silverleaf QC are acting as legal advisors to the investor group. Fenwick & West LLP is acting as legal advisor to Andreessen Horowitz. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to Niklas Zennstrom and Janus Friis.

Deal Value (US$ Million) 2025
Deal Type                Private Equity
Sub-Category             None
Deal Status              Completed: 2009-11-19

Deal Participants

Target (Company)   Skype Technologies S.A.
Acquirer (Company) Joltid Limited
Vendor (Company)   eBay, Inc.

Deal Rationale

The sale would allow eBay to focus all of its energies on the opportunities in front of its e-commerce business unit PayPal, Inc.

% Acquisition 70%

Related terms: acquisition, advisor, business, communications, ecommerce, equity, index, investment, legal, luxembourg, note, online, Private Equity, silver, software, technology, venture capital, web