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(18-Jan-09) EBay announced on Nov. 19 that it had finally completed the sale of a majority stake in Skype Technologies to a group of investors, including the Canada Pension Plan Investment Board. While the sale was a struggle — Skype's founders launched a legal battle against eBay that put the deal in peril — the real work for the new owners is just beginning. The investor group, led by American private-equity firm Silver Lake, now has to figure out how to convince more Skype users to actually pay for the communications service, all the while fending off Google, which is becoming a major competitor.

Skype, which permits free video and voice calling over the Internet, launched in 2003. EBay snatched up the popular Luxembourg-based company in 2005 for a whopping US$2.5 billion, from founders Niklas Zennström and Janus Friis. EBay wanted to integrate Skype with its auction operations, allowing buyers and sellers to interact, but the desired results never materialized. Under shareholder pressure, eBay announced the sale to the Silver Lake-led group in September. Founders Zennström and Friis, who still owned the underlying technology, quickly filed a suit. Ultimately, the pair settled for a 14% stake in the company. (The investor group, including the CPPIB, owns 56%; eBay retains 30%.)

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Search Code: 15969
Published: December 18, 2009
Last Revised: December 18, 2009

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