EBay to Make $1.4 Billion on Skype After Microsoft Acquisition

EBay Inc. (EBAY) said it will reap more than a 50 percent return from the company’s $2.6 billion investment in Skype Technologies SA six years ago, following Microsoft Corp. (MSFT)’s agreement yesterday to buy the Web calling service.

“With this sale, we have realized a total return of $1.4 billion on our original investment in Skype,” John Pluhowski, a spokesman for San Jose, California-based EBay, said in an e- mail.

Microsoft agreed to buy Skype, the world’s most popular Web-calling service, for $8.5 billion from investors led by private equity firm Silver Lake to attract users and narrow Google Inc.’s lead in Web advertising. Before the offer, Skype had announced plans to pursue an initial public offering.

This marks the second time that Skype, founded in Estonia in 2003, will be part of a corporate parent. EBay in 2005 outbid Google and Yahoo! Inc. for the money-losing startup. EBay, the world’s largest online marketplace, had said then that Skype could spur sales by letting buyers and sellers on its main auction site talk for free with a mouse click. That never panned out and two years later EBay wrote down the value of Skype by $900 million.

EBay Chief Executive Officer John Donahoe in 2009 sold 70 percent of the calling service to investors in a deal that valued Skype at $2.75 billion. Silver Lake, Skype’s largest owner, then brokered the deal with Redmond, Washington-based Microsoft.

To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net;

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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EBay to Make $1.4 Billion on Skype

Andrew Harrer/Bloomberg

EBay Inc. said it will reap more than a 50 percent return from the company’s $2.6 billion investment in Skype Technologies SA.

EBay Inc. said it will reap more than a 50 percent return from the company’s $2.6 billion investment in Skype Technologies SA. Photographer: Andrew Harrer/Bloomberg