eBay to sell 65 percent stake in Skype

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It’s confirmed! eBay has said that it will sell a 65 percent controlling stake of internet telephony and VoIP service Skype to private investors, ending a relationship that was confusing in the first place to many people in the tech sector.

The private investors include the previously revealed Andreessen Horowitz, Index Ventures and Silver Lake Partners, but also include the Canada Pension Plan Investment Board; and have agreed to pay US$1.9 billion in cash, also $125 million note, for the stake. eBay will retain a smaller 35 percent stake in Skype, allowing it to no longer run the business day-to-day, but still allow it have a seat in the board.

After buying it in 2005, it has had a turbulent effect on eBay. In 2007, it took a US$1.4 billion write-down on its initial acquisition, and had a public split with the co-founders after a pay dispute. The co-founders are now suing eBay over the technology-licensing agreement for Skype.

However, in the second quarter, Skype’s revenue was up 25 percent from a year earlier at $170 million, and has currently 480 million users worldwide. This is expected to grow.

The deal was seen by many as not really fitting in with its core business of auctions, and eBay has admitted that it was a poor fit. Skype will retain its current CEO and its current headquarters in London.

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