Skype’s Set Free (Almost)

When eBay purchased Skype in 2005, it was a $4.1-billion strategic head-scratcher.

Why eBay, the world’s leading online auction service, needed to buy a disruptive VOIP service provider – even one as popular as Skype – made little sense despite assertions there were many synergies, including how Skype would allow eBay to roll out click-to-call to enhance its core online business.

The deal was a mistake that distracted eBay and, arguably, retarded Skype’s progress.

The bottom line, however, is it wasn’t a complete disaster for eBay as they were able to get $2.75-billion for a 65% stake in Skype from a group of investors led by Index Ventures and Silver Lake Partners.

It’s a good deal for eBay because it gets the business refocused strategically, while providing eBay with some more financial stability and flexibility. eBay also gets to keep 35% as a way to ensure it shares in the wealthy if Skype becomes more successful and valuable.

More important is how it will, hopefully, provide Skype with more strategic flexibility and freedom to pursue ideas, new markets and new services that it couldn’t do while part of the eBay empire.

What’s impressive is that Skype has thrived financially while owned by eBay, so it will be interesting to see if Skype’s growth as a standalone entity will be even more impressive.

This entry was posted in M&A, Telecom Acquisitions, Financing and tagged , , . Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.
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