Skype is neither a start-up nor a stalwart.
Emerging in the aftermath of the dot-com bust, the company was highly coveted in its early years for its promising technology, which routed phone calls over the Internet for a nominal cost. Despite lackluster financials, Skype was acquired in 2005 by eBay for $3.1 billion, including additional performance payments.
But Skype was not a good fit, and eBay eventually sold a controlling stake in the company several years later to a group of investors led by the private equity firm Silver Lake Partners, and it took a $1.4 billion hit on the sale.
Now, several investors stand to benefit from Microsoft’s planned $8.5 billion acquisition of Skype, which was announced on Tuesday. Skype’s hodgepodge of owners, including a private equity firm, a pension fund and a venture capitalist, reflects its changing fortunes over the years.
Here is a look at how investors could profit from their current stakes in Skype under the Microsoft deal. (Calculations are based on a valuation of $7.76 billion, which equals the purchase price minus outstanding debt.)
Andreessen Horowitz
In one of its first major deals, the venture capital firm — co-founded by Marc Andreessen, who helped start Netscape — bought a 3 percent stake in 2009 for $50 million, at a $2.75 billion valuation. The sale of Skype will be the first exit for Andreessen Horowitz.
Estimated Value of Skype Investment: $200 million
eBay International
While it sold off the majority of Skype to investors in 2009, eBay still owns a 30 percent stake. According to a recent filing, eBay estimated its stake to be worth “approximately $620.0 million.” As a result of the Microsoft deal, that stake is now valued at $2.3 billion. Combined with the proceeds from its earlier transaction, EBay stands to capture more than $4 billion from the sale of Skype. Not a bad pay day, considering that eBay bought the company in a heavily criticized deal for $3.1 billion in 2005.
Estimated Value: $2.3 billion
Joltid
In 2009, the founders of Skype, Niklas Zennstrom and Janus Friis, sued Skype over patent issues. After a favorable settlement, the two founders held 14 percent of Skype and placed the investment in a holding company, Joltid.
Estimated Value: $1.1 billion
Silver Lake Partners and the Canada Pension Plan Investment Board
In 2009, Silver Lake and a team of investors bought a controlling stake in Skype. After the legal settlement with Joltid, the investment group — which also included the Canada Pension Plan Investment Board and Andreessen Horowitz — owned a 56 percent stake in Skype. The Canada Pension Plan Investment Board, a $145 billion pension fund, often buys direct stakes in privately held companies, and holds investments in the communications company Avaya, the media company Clear Channel and the chip maker Freescale Semiconductor.
Estimated Value: $4.4 billion
Emerging in the aftermath of the dot-com bust, the company was highly coveted in its early years for its promising technology, which routed phone calls over the Internet for a nominal cost. Despite lackluster financials, Skype was acquired in 2005 by eBay for $3.1 billion, including additional performance payments.
But Skype was not a good fit, and eBay eventually sold a controlling stake in the company several years later to a group of investors led by the private equity firm Silver Lake Partners, and it took a $1.4 billion hit on the sale.
Here is a look at how investors could profit from their current stakes in Skype under the Microsoft deal. (Calculations are based on a valuation of $7.76 billion, which equals the purchase price minus outstanding debt.)
Andreessen Horowitz
In one of its first major deals, the venture capital firm — co-founded by Marc Andreessen, who helped start Netscape — bought a 3 percent stake in 2009 for $50 million, at a $2.75 billion valuation. The sale of Skype will be the first exit for Andreessen Horowitz.
Estimated Value of Skype Investment: $200 million
eBay International
While it sold off the majority of Skype to investors in 2009, eBay still owns a 30 percent stake. According to a recent filing, eBay estimated its stake to be worth “approximately $620.0 million.” As a result of the Microsoft deal, that stake is now valued at $2.3 billion. Combined with the proceeds from its earlier transaction, EBay stands to capture more than $4 billion from the sale of Skype. Not a bad pay day, considering that eBay bought the company in a heavily criticized deal for $3.1 billion in 2005.
Estimated Value: $2.3 billion
Joltid
In 2009, the founders of Skype, Niklas Zennstrom and Janus Friis, sued Skype over patent issues. After a favorable settlement, the two founders held 14 percent of Skype and placed the investment in a holding company, Joltid.
Estimated Value: $1.1 billion
Silver Lake Partners and the Canada Pension Plan Investment Board
In 2009, Silver Lake and a team of investors bought a controlling stake in Skype. After the legal settlement with Joltid, the investment group — which also included the Canada Pension Plan Investment Board and Andreessen Horowitz — owned a 56 percent stake in Skype. The Canada Pension Plan Investment Board, a $145 billion pension fund, often buys direct stakes in privately held companies, and holds investments in the communications company Avaya, the media company Clear Channel and the chip maker Freescale Semiconductor.
Estimated Value: $4.4 billion
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