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Tag: silver-lake

  • Microsoft to Acquire Skype for $8.5 Billion

    Microsoft and Skype have just announced that they have entered into a definitive agreement under which Microsoft will acquire Skype for $8.5 billion in cash from the investor group led by Silver Lake.

    With 170 million connected users and over 207 billion minutes of voice and video conversations in 2010, Skype has been a pioneer in creating connections among friends, families and business colleagues globally. Microsoft has a long-standing focus and investment in real-time communications across its various platforms, including Lync (which saw 30 percent revenue growth in Q3), Outlook, Messenger, Hotmail and Xbox LIVE.

    The companies informed that Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms.

    "Skype is a phenomenal service that is loved by millions of people around the world," said Microsoft CEO Steve Ballmer. "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."

    Skype will become a new business division within Microsoft, and Skype CEO Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Ballmer.

    "Microsoft and Skype share the vision of bringing software innovation and products to our customers," said Tony Bates. "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," Bates said.

    According to the companies, the acquisition will increase the accessibility of real-time video and voice communications, bringing benefits to both consumers and enterprise users and "generating significant new business and revenue opportunities." The combination will extend Skype’s world-class brand and the reach of its networked platform, while enhancing Microsoft’s existing portfolio of real-time communications products and services.

    "Tony Bates has a great track record as a leader and will strengthen the Microsoft management team. I’m looking forward to Skype’s talented global workforce bringing its insights, ideas and experience to Microsoft," Ballmer said.

    Founded in 2003, Skype was acquired by eBay in September 2005, and then acquired by an investment group led by Silver Lake in November 2009. Skype has made impressive progress over the past 18 months under Silver Lake’s leadership, increasing monthly calling minutes by 150 percent, developing new revenue streams and strategic partnerships, acquiring the intellectual property powering its peer-to-peer network, and recruiting an outstanding senior management team.

    Other members of the selling investor group led by Silver Lake include eBay International AG, CPP Investment Board, Joltid Limited in partnership with Europlay Capital Advisors; and Andreessen Horowitz.

  • Skype and eBay Settle with Joltid

    Skype and eBay announced they has reached a settlement agreement with Joltid and Joost N.V. that gives Skype ownership over all software previously licensed from Joltid.

    It also ends all litigation currently pending against the investor group and eBay at the closing of the acquisition (the investor group led by Silver Lake had previously entered into a definitive agreement to acquire a majority stake in Skype from the company).

    As part of the settlement agreement, Joltid and Skype founders Niklas Zennström and Janus Friis will join the investor group, contributing Joltid software and making a significant capital investment in exchange for a 14 percent stake in Skype.

    As a result, Silver Lake and other investors including Andreessen Horowitz and the Canada Pension Plan Investment Board (CPPIB), will together hold 56 percent of Skype and eBay will retain 30 percent.

    eBay will 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 deal, which values Skype at $2.75 billion and is not subject to a financing condition, is expected to close in the fourth quarter of 2009.

    “We will now have ownership of the software previously licensed from Joltid, so we’ll be in control of our technology future,” Josh Silverman, president of Skype, wrote at Skype’s blog.

    “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,” he added.

    Commenting on the agreement on behalf of the investor group, Silver Lake Managing Director Egon Durban said: “We are very pleased to have the litigation resolved. We remain confident in a great future for Skype, and we look forward to working with Niklas, Janus and the other investors as partners to help the company achieve its full potential.”

    The investor group will no longer include Index Ventures, which has withdrawn from participation. “Although Skype has the potential to be a great investment, the deal terms changed for Index such that it no longer matches our investment criteria and thus we have decided not to participate in the transaction,” said Danny Rimer of Index Ventures.