US tech giant Microsoft has announced plans to acquire VOIP operator Skype for US$8.5bn in cash.
Skype, which is majority backed by PE investors, is being advised by Goldman Sachs and JP Morgan, while Microsoft has not hired an adviser. The companies…
US tech giant Microsoft has announced plans to acquire VOIP operator Skype for US$8.5bn in cash.
Skype, which is majority backed by PE investors, is being advised by Goldman Sachs and JP Morgan, while Microsoft has not hired an adviser. The companies expect the deal will gain regulatory clearance during the course of this calendar year.
The deal sent dealmakers and the blogosphere into a fluster, as observers debated whether Microsoft had overpaid for an asset being sold for the second time by the same owners.
The money earned by the sellers was reportedly US$2.55bn for eBay (30% stake), US$1.19bn for founders Niklas Zeenstrom and Janus Friis (14% stake) and US$4.76bn for Silver Lake, Andressen Horowitz and the Canada Pension Plan Investment Board (56%).
“Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world,” said Microsoft CEO Steve Ballmer in a statement.
Skype CEO Tony Bates will become president of a new Microsoft Skype division under the plan, reporting directly to Ballmer.
Bates said: “Microsoft and Skype share the vision of bringing software innovation and products to our customers.
“Together, we will be able to accelerate Skype’s plans to extend our global community and introduce new ways for everyone to communicate and collaborate.” Rumours of potential ‘partnerships’ have recently been hounding Skype, which filed intentions to list to the US Securities & Exchange Commission in August 2010.
The IPO had reportedly been placed on the backburner while the company reportedly held partnership talks with US internet behemoths Facebook and Google – although following the deal, there was skepticism that Facebook had ever held taken part in any talks. Google’s offer was apparently just half of what Microsoft paid.
Announcing the acquisition, Bates told journalists that Skype had remained committed to going public right until an agreement with Microsoft was reached late on Monday 9 May.
Skype was founded in 2003 and acquired by US online auction group Ebay for US$2.6bn in 2005. Ebay subsequently sold roughly 65% of the company to a consortium of investors, led by Silver Lake, in November 2009 for US$1.9bn in cash, and a US$125m note from the buyer, which has since been repaid.
Skype claims to have 700 million users across the world, with ten million of these paying for its voice and video services.
It is expected that Skype will be used as an add-on for consumer products such as Kinect and the Xbox, business products such as Outlook and Office, and Windows Mobile, which recently signed up to a partnership with handset maker Nokia.
Ballmer said Skype would bolster Microsoft’s enterprise units, and that the two companies would also work together to generate more revenue through advertising on Skype, but did not reveal details.
The deal is not expected to affect any of Skype’s existing agreements with other telecoms and technology companies.
