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Skype deal to go ahead, says eBay

Warwick Ashford

EBay has announced that the way has been cleared for the sale of a majority share in its Skype internet telephony service to the investor group led by Silver Lake.

Skype founders Niklas Zennstrom and Janus Friis are to be board members. They are allowed to buy 14% stake of the company.

In exchange, Skype will have ownership of the software previously licensed from Joltid, also founded by Niklas Zennstrom and Janus Friis.

Silver Lake and other investors, including Andreessen Horowitz, will together hold 56% of Skype, while eBay will retain a 30% stake.

The future of Skype was thrown into uncertainty after its founders launched a legal battle over rights to the core peer-to-peer software owned by Joltid.

The investor group no longer includes Index Ventures, whose partner Michelangelo Volpi was the focus of other litigation over the Skype deal.

Michelangelo Volpi, who worked for Zennstrom and Friis at a firm called Joost, was accused of using confidential information to assemble the buyout team.

The legal disputes have long threatened to scuttle the investor group's $1.9bn cash deal to buy a majority share in Skype.

"All litigation against eBay, Skype and the investor group ends, so we'll be free to concentrate all of our efforts on building the world's greatest communications software," Josh Silverman, Skype chief executive said in a statement.

Skype earned $185m for eBay in the last quarter. But eBay decided to sell a majority stake in Skype because it did not fit with the auction house's core business.

"Skype will be well positioned to move forward under new owners with ownership and control over its core technology," said John Donahoe, chief executive at eBay.

"At the same time, eBay continues to retain a significant stake in Skype and will benefit from its continued growth. We look forward to closing the deal and focusing on growing our core ecommerce and payments businesses," he said.

The deal, which values Skype at $2.75bn, is expected to close in the fourth quarter of 2009.


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