Microsoft Gets Stuffed and Pays $8 Billion for Skype

October 14, 2005 — eBay investors relations:

In accordance with the terms of the acquisition agreement as announced on September 12, 2005, eBay acquired all of the outstanding shares of privately-held Skype for a total up-front consideration of approximately €2.1 billion, or approximately $2.5 billion, plus potential performance-based consideration. The up-front consideration is comprised of approximately $1.3 billion in cash and the value of 32.8 million shares of eBay stock, which are subject to certain restrictions on resale.

September 1, 2009 – eBay investors relations:

eBay today announced it has signed a definitive agreement to sell its Skype communications unit in a deal valuing the business at $2.75 billion. The buyer, who will control an approximately 65 percent stake, is an investor group led by Silver Lake and includes Index Ventures, Andreessen Horowitz and the Canada Pension Plan (CPP) Investment Board. eBay is expected to receive approximately $1.9 billion in cash upon the completion of the sale and a note from the buyer in the principal amount of $125 million. The company will retain an approximately 35 percent equity investment in Skype.

May, 10, 2011 — Bloomberg:

May 10 (Bloomberg) -- Microsoft Corp. agreed to buy Skype Technologies SA for $8.5 billion, using its cash pile to gain the world’s most popular Web-calling service and expand its Internet presence after past failures.

Microsoft will acquire Luxembourg-based Skype, with 170 million active users, from an investor group led by Silver Lake, the companies said in a statement today. The agreement was approved by the boards of directors of both companies.

The takeover may help Microsoft Chief Executive Officer Steve Ballmer attract Web users and narrow Google Inc.’s lead in Web advertising. Microsoft will connect Skype to its Outlook e- mail, Xbox game console, Windows mobile phones and corporate- phone software. The acquisition is Redmond, Washington-based Microsoft’s largest, surpassing the purchase of AQuantive Inc. for about $6 billion in 2007.

Skype is definitely a great technology, and I use it everyday for free on my Mac and iPhone. But when it comes to making calls to landlines, Skype is over expensive compared to competitors like Freecall.com who even give you two different great apps to make calls: on SIP app to make over 3G/Wifi and one to make calls using your call credits, when you do not have data coverage.

Additionally, Microsoft has agreed to pay 200% more than what Silver Lake paid less than 2 years ago. As usual, Microsoft is a late comer, a failure, and will on top of that pays a high cash price for that.

Finally, given the number of mega-takeovers and IPO going on, and the failure of the markets to rally further, we are getting very ready for a very long lasting top in my opinion.