eBay has just announced that it has reached a settlement with the founders of Skype, clearing the way for the sale of the Internet communication company to a consortium formed by private equity firm Silver Lake Partners, Andreessen Horowitz and the Canada Pension Plan Investment Board.
Index Ventures, a historical investor in Skype, is not going to be part of that buying party after all, and its partner Mike Volpi is definitely out of the picture (no surprises there). Marc Andreessen, partner of Andreessen Horowitz, tells us: “Everything is settled—all lawsuits, all IP. The Joltid IP is now owned by Skype. The company is free and clear to execute to its full potential.”
The original Skype founders, Niklas Zennström and Janus Friis, are now back in the game. The Scandinavian businessmen are getting 14 percent of Skype back for rights to the Global Index P2P technology their company Joltid controls (which is key to the Skype software) – and not 10% like previously reported by other media. In addition, Friis and Zennström gain representation on the board of the new entity. The two men are also putting in a ‘significant amount of capital’ of their own in exchange for the stake in the new company, presumably through their Atomico Ventures fund.
Marc Andreessen, General Partner of Andreessen Horowitz, tells us: “Everything is settled—all lawsuits, all IP. The Joltid IP is now owned by Skype. The company is free and clear to execute to its full potential.”
Update: Andreessen shares more of his thoughts on the deal, saying Skype is one of the most important companies on the Internet.
Thus ends the legal kerfuffle surrounding eBay’s sale of Skype to the investor consortium (news we broke last August), which it acquired back in September 2005 for $2.6 billion (written down to $1.2 billion in 2007). Friis and Zennström had accused eBay of breaking a licensing deal and sued the investor group last September, claiming damages were growing by $75 million a day.
The newly structured buyout group is now on track to buy approximately 56% of Skype, with eBay continuing to own 30% and the original founders 14%, in a deal valuing Skype at $2.75 billion. 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 deal is still expected to close in the fourth quarter of 2009.
Withdrawing party Index Ventures released the following statement:
“We are pleased that Skype will now be able to put litigation behind it, and we wish Josh Silverman, his team and the Skype investors well in continuing to grow a great business. 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.”
Meanwhile, the two ruthless European entrepreneurs who founded Skype walk away with a renewed stake, seats on the company’s board and the smile of victory on their faces.
(Top image via E24)